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Help to Buy: Equity Loan Calculations Check
John310
Posts: 12 Forumite
Hi,
Can someone please confirm if my calculations below are correct.
House Value £160k
20% HTB 32k
75% mortgage 120k
5% deposit 8k
In the lenders eyes is the affordability ratio worked out from the total house value (160k in this example) or the borrowed amount of 120k?
i.e if salary = 30k am i borrowing 5.3x (160k) or 4x (120k)?
Thanks for the clarification.
Can someone please confirm if my calculations below are correct.
House Value £160k
20% HTB 32k
75% mortgage 120k
5% deposit 8k
In the lenders eyes is the affordability ratio worked out from the total house value (160k in this example) or the borrowed amount of 120k?
i.e if salary = 30k am i borrowing 5.3x (160k) or 4x (120k)?
Thanks for the clarification.
0
Comments
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BUMPING For Help0
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I believe they work out the mortgage for the £120k using a 75% LTV (which gives a good rate).
They then factor in the Help to Buy loan repayments from year 6 too, in affordability checks. This is 1.75% interest. So it's about £47 per month (£560 annually) for £32k.0 -
I believe they work out the mortgage for the £120k using a 75% LTV (which gives a good rate).
They then factor in the Help to Buy loan repayments from year 6 too, in affordability checks. This is 1.75% interest. So it's about £47 per month (£560 annually) for £32k.
Thanks for the help.
I can't find anywhere online which makes this clear. Can anyone confirm this please0 -
I am currently waiting for my application to go through with Santander for a new build using Help to Buy.
Although someone else (someone qualified!) will explain the process better than me, this is basically how it works.0 -
Lenders factor 3% or 4% of the equity loan into mortgage affordability, not the actual 1.75% year six cost.
Affordability is for the mortgage, not the property so what you are borrowing is what matters.
Don't forget you have to satisfy the Government's HTB affordability calculator (so no more than 4.5 x income, no more than 45% debt to household income etc) as well as a mortgage lender's.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
kingstreet wrote: »Lenders factor 3% or 4% of the equity loan into mortgage affordability, not the actual 1.75% year six cost.
Affordability is for the mortgage, not the property so what you are borrowing is what matters.
Don't forget you have to satisfy the Government's HTB affordability calculator (so no more than 4.5 x income, no more than 45% debt to household income etc) as well as a mortgage lender's.
Thank you very much, just what I was looking for.
As far as I can see they don't make this very clear on the govt HTB site.0
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