HTB mortgage query

AS123

Hi,

I wonder if anyone would be able to advise me on the following situation.

My partner and I have recently secured a property via a holding deposit that we wish to purchase via HTB equity loan scheme.

The property is priced at £300k and we have a 5% deposit. As we are more than 6 months from when the property will be available we are not yet able to proceed with mortgage applications. Once the company have a date when the property will be available then the vendors will contact us to come in and pay a further deposit, complete some paperwork, and then initiate a 6 week period in which we need to find a mortgage.

We have a dual income of 83k thus we believe that affordability of the property unlikely to be a problem, however, our bank statements need a bit of time to 'tidy up' for want of a better term. We hadn't planned on buying quite so quickly but something has become available that we do not wish to miss out on.

My questions are:

1. Anyone had experience of a similar situation where a vendor issues a period in which to obtain a mortgage and they have extended that period?

2. Does a lender with a HTB mortgage treat someone with a 5% deposit and 20% equity loan exactly as it would treat someone with a 25% cash deposit?

3. Anyone with experience of HTB mortgages able to advise requirements from lenders re: how many months statements required at application?

I'm hoping that will be able to extend 6 week period that will come to hopefully allow statements to clear in time. I believe if that occurs then will have 3 months of statements that will be as a lender would wish to see them. I was aware needed to tidy up statements prior to mortgage application, we have just been caught a little by surprise by how quickly things have picked up pace.

Any thoughts welcome and appreciated,

Thanks :beer:

Lilla_D

Question 1) It's normal for new build purchases to be given a timeframe (usually 4 weeks) to exchange contracts. Your 6-week period is quite good compared to that. I've had various clients' deadline extended, so it's not unheard of, but obviously can't be guaranteed.

2) No. HTB is different from a normal purchase. E.g. not every lender offers a HTB mortgage, so your lender choice is already limited. Then even if the 20% loan is interest free for the first 5 years, lenders do calculate 3-5% of it as a credit commitment, so your potential borrowing may well reduce.

3) Lenders normally ask for 3 months bank statements regardless whether it's a HTB purchase. (Some lenders don't automatically ask for bank statements at all, although the underwriter may decide to ask for them later). You'll need to be approved for the HTB loan first (check out the HTB website for info), as lenders ask for evidence of it.

Not sure what's wrong with your bank statements, but if you are running in overdraft, then indeed it's a good idea to get out of it, even if not every lender is that bothered about it.

dannyjebb

First question you should be looking at, is it leasehold? We recently pulled out of buying a new build after looking at the contract and all the disgraceful clauses you are stuck with being a leaseholder AKA renter. Paying a fee to have a pet! paying a fee to remortgage! paying a fee to paint the walls!! the list goes on. There is a huge campaign at the moment and I am sure you have Taylor Wimpey recently trying to sort out the mess they have left 1000s of people in who are stuck in contracts with ground rent that doubles every 5 years! Some banks have also stopped lending money on leasehold houses ie Nationwide http://www.telegraph.co.uk/personal-banking/mortgages/nationwide-stops-lending-leasehold-homes-punitive-ground-rents/

At least you have plenty of time to make an informed choice

AS123

Thank you both for your reply.

Danny: It is indeed a leasehold property - I shall have to enquire as to the terms of the agreement - thanks for making me aware as I hadn't considered that.

Lilla: thanks for your reply - I'll take a look at HTB website. I was able to get a mortgage in principle agreement for 320k based on a 10% deposit. I did this in a hurry to hold the property and it was done online without discussion. The mortgage we would require would be £225k, even allowing for a 3-5% increase due to credit commitment of equity loan it would suggest had a bit in hand. At what stage of proceedings would I need my bank statements to be available?

Thanks for your help

SuboJvR

Sorry to come to the thread a bit late - wondering how you got on?

Our local help to buy agent (unsure if this is across the whole HTB scheme) stipulates a max household income of £80,000 for the scheme...

kingstreet

SuboJvR wrote: »

Sorry to come to the thread a bit late - wondering how you got on?

Our local help to buy agent (unsure if this is across the whole HTB scheme) stipulates a max household income of £80,000 for the scheme...

Are you sure they aren't getting confused with shared ownership?

There is no maximum income on HTB Equity Loan and the HTB Agents can't step outside HCA rules and impose their own.

SuboJvR

Correct of course kingstreet!

Re-read their blurb properly - they've not phrased it very well but you are quite right!