Help to Buy Calculations

FozzieCan

I'm looking for some advice and we've spent hours searching but can't find the answers.

Trying to buy a house with HTB Equity and finding so many hurdles without getting clear answers.

DH gets a base salary, a guaranteed monthly bonus of £1000 and a quarterly bonus. Last year his bonus total was a similar amount to his base salary. As a top performer, he was moved to a higher compensation scheme as of 1 Jan and his bonus compensation will now increase by approximately 40%. He has letters from his company indicating the increase. His first quarterly bonus in 2017 was actually 70% higher than previous bonuses and it should continue with a similar amount. His bonus income for 2017 and beyond will likely be about £20k more per year than his base salary.

1. When entering the income and bonus income in the HTB PIF and in their calculator, how should the income be keyed in? We can't find any specific advice and the advice from two IFA's has been unclear. Should the annual income include the guaranteed bonus since it's guaranteed regular income? (we have an employer letter indicating that it's guaranteed, paid monthly and also indicating his bonus compensation will increase by approx 40%)?

2. Should the bonus entered be based on what he'll get with the new scheme and already earned in Q1 2017 (x4) or just what he's earned in the last 12 months? Last quarter? Last ...???

We can't find advice what is accepted for HTB. One IFA used a different calculator for each lender with slightly different numbers. Should the info be based on lender requirements?

We have received tentative approval from lenders for a mortgage but their max is 25 years with HTB. Since bonus income is only taken at 50%, HTB calculator seems to work at 30 years. Do they need to match?

It's very stressful! We've owned several houses in the past in other countries and never found the process as daunting. The mortgage payment will be almost £1k less than we're currently paying in rent, council tax is 50% less. DH has a credit score of 999 with the credit agency (perfect score). No other debts. Significant investments outside the country.

I'm self-employed and a citizen of another Commonwealth country without ILR, so the number of lenders willing to lend to someone without ILR is significant.

Sorry for the long post but appreciate any advice. :T

kingstreet

FozzieCan wrote: »

1. When entering the income and bonus income in the HTB PIF and in their calculator, how should the income be keyed in? We can't find any specific advice and the advice from two IFA's has been unclear. Should the annual income include the guaranteed bonus since it's guaranteed regular income? (we have an employer letter indicating that it's guaranteed, paid monthly and also indicating his bonus compensation will increase by approx 40%)?

2. Should the bonus entered be based on what he'll get with the new scheme and already earned in Q1 2017 (x4) or just what he's earned in the last 12 months? Last quarter? Last ...???

Enter anything guaranteed as basic.

Any variable earnings should be taken from latest three payslips and averaged, then annualised. You cannot use future income if you can't evidence it being earned in the past.

You've only got a few lenders to go at and most of them work the same way, so do this for the lender calculators as well as the HTB Affordability Calculator.

We have received tentative approval from lenders for a mortgage but their max is 25 years with HTB. Since bonus income is only taken at 50%, HTB calculator seems to work at 30 years. Do they need to match?

The lenders you have to choose from will allow a longer term than the 25* years for the equity loan and no, they don't have to match. When we submit the PIF & Res to the HTB Agent, we note on the email the term is X years for affordability and attach a copy of the HTB AC to accompany.

*If you are limited by age to 25 years, (say you are 46 and your lender will go only to 70) you can't use the longer term for the HTB PIF/HTB AC if it takes you past that age.

I'm self-employed and a citizen of another Commonwealth country without ILR, so the number of lenders willing to lend to someone without ILR is significant.

Yes. You have only a small number to choose from.

You really need an experienced newbuild broker as it sounds like you've spoken to general advisors not experienced or knowledgeable about HTB Equity Loan.

FozzieCan

Thank you so much for taking the time to reply. I really appreciate it.

The IFA we originally spoke with was the one working with the builder. He had originally given us the go-ahead from HTB (before submitting the PIF to HTB) and then found the issue with my citizenship with most lenders. It's the first time I've felt discriminated against in my life! My husband is 43, turning 44 next month.

I had called HTB and was just told to speak with the IFA and they wouldn't let me speak to someone because they don't offer financial advice, which wasn't what I was looking for at all. I just wanted to confirm how it is all calculated as it's obviously significantly different for each lender and I wanted to know how it's supposed to be done for HTB.

I think we're closer to getting it sorted out and really appreciate your advice. It's just frustrating because based on our gross income YTD and the actual mortgage payment prediction from the bank, it would be about 11% of our gross income so we're not trying to extend ourselves at all.