HTB Equity Loan - Mortgage Advice

JOD1989

Hi,

My girlfriend and I are looking to buy a £96,000 apartment (2 bed new build). We have approx £9000 saved and plan to put a 5% deposit and use the HTB equity loan (of 20%).

The combined 25% deposit would presumably get us a low interest rate allowing us to save and pay back the equity loan within 5 years (before they start to charge interest).

I can't see the benefit in renting for another 6 -12 months trying to get a 10% deposit. We would have to pay approx £7000 a year in rent and would get a worse interest rate than using the HTB equity loan.

Does anybody disagree with my logic or think of any negatives to using the HTB equity loan scheme?

Another concern I have is we both have only lived in the UK for 6 years (she is American with British nationality and I am Irish). For the first 3 years we moved here Banks were always reluctant to give us loans. I know this is due to lack of credit history and we both have credit cards that we use and pay off every month. Can anybody see this being an issue?

I do plan on running all this by a broker I just wanted to get every-bodies feedback first.

Regards,
Jamie

moneycantbuyyouhappiness

I'm sure someone will correct me if I'm wrong but I think you can only use certain mortgage products with the HTB Equity Loan. I can imagine the interest rates on these products will not be as good as a standard 75% LTV mortgage.

lewishardwick

I cannot speak for the mortgage products. But my partner is Irish, has been here and working since 2012. There were no issues obtaining a mortgage offer.

JOD1989

Thanks for the replies guys.

With regards to the mortgage products I thought the whole point of the equity loan was that it would give you access to better rates, but maybe I am wrong. Hopefully someone can clarify.

kingstreet

There are specific HTB Equity Loan products for newbuilds.

You would need to compare them with your other options to see if they make sense to you.

Verix

Your rates would almost certainly be lower with HTB than if you put down just 10% deposit, rates as low as 1.65% available. Plus you lender choices are severely limited if you only put down a 10% on a new build flat.

Thrugelmir

JOD1989 wrote: »

The combined 25% deposit would presumably get us a low interest rate allowing us to save and pay back the equity loan within 5 years (before they start to charge interest).

Not a 25% deposit it's 5%. A loan is not a deposit. Hidden in the background is a fee. The Government isn't taking an outright risk with this scheme.