Help to Buy as an Option

stu2500

Hi, as from my previous posts, the situation is that my partner has a property we wish to let out when we buy a new home, which means we need to pay stamp duty etc.

Therefore, as an alternative, I was looking into purchasing a new build with help to buy equity loan in my sole name. Could anyone shed some light on how this works? I will have a deposit of approximately £7,000 + money for fees, how do I calculate affordability for these types of mortgage? Do you need to be able to afford the whole mortgage and equity loan value combined, or is it just the mortgage and a % of the equity loan. Are there any calculators to do this online?

Using an intermediaries calculator, I can afford a mortgage of: £110,000 (natwest and I understand this is dependent on credit checks etc)

Therefore I'd have a mortgage of £110,000 + £7,000 deposit and then the need for an equity loan. Would this work? Or, is the best option to get a smaller mortgage and larger equity loan to purchase a cheaper house? (£122k for example, with a help to buy price of £97k)

Thanks for the help, it is greatly appreciated.

tom2205

So use a figure of 3% for the equity loan element factored in to your monthly loans figure. Using your example, if you purchased a new build house at £122,000 and had a 5% deposit of £6,100, a 20% equity loan of £24,400 and then the mortgage of £91,500 they would be based your equity loan interest payment on £61 per month so you would need to make sure you are including a 3% payment on the equity loan as part of your affordability.