HTB Equity Loan - 4.5x Cap for Lending?

[Deleted User]

I have seen an article which says HTB Equity Loan is not available where the mortgage requirement is over 4.5x salary.

I can't seem to substantiate that on the HTB South East Website. Does it still apply, given that lenders are increasingly offering 40 year terms?

For example my Nationwide indicative quote over 40 years is over 4.5x salary. Obviously there's credit history etc to go into that which is likely to reduce the loan - but with manual underwriting, strong asset quality (e.g. House rather than say a New Build flat) & 20% Equity Loan, it could be possible to make a case for building societies to exceed 4.5x.

IF the 4.5x cap is still in existence - what does it cover in terms of "income"? For example, I'm assuming overtime and bonus will be included? As 4.5x basic salary seems even more ridiculous!

I'm eligible from October when I'm no longer "credit impaired" so looking at options. Although I'm likely to have a decent deposit, I think adding the HTB Equity Loan + all/most of the deposit and getting a larger house at 75% LTV is likely to appeal more (both to me, and to lenders). Even with the caveat of ideally repaying the loan within 6/7 years etc

Caz3121

there is information here on what is included as income for the calculation
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/495034/Equity_Loan_calculator_guidance_-_Jan_2016.pdf

[Deleted User]

Applicants should avoid borrowing amounts deemed as unsustainable. The HCA considers a 45% household debt to net income ratio as maximising their contribution to home ownership yet not over
stretching in order to allow applicants to adapt to market changes in interest rates etc. and allow for the introduction of fees in year 6. A multiple of 4.5 x income is also the maximum applicants can use to
purchase their share.

Thanks, looks like that's pretty fixed for the foreseeable future!

Can anyone access http://cfg.homesandcommunities.co.uk/cfg?page_id=&page=1 - I get 403 forbidden.

Would be handy to be able to look at the calculator they've linked and try some values in more detail

Ah - Found it: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/631255/Copy_of_HTB_Equity_Loan_Calculator_-_April_2017.xls

kingstreet

As long as you pass the HTB Affordability Calculator and you can get the mortgage you require, you'll be fine.

The equity loan is repayable on sale of the property, or at the end of 25 years whichever comes first. You can have a mortgage with a longer term, but the HTB loan MUST be repaid on or before the mortgage.