Help 2 Buy Equity Loan

SwindonPaul

Hi everyone,

I've been reading the forums for years but this is my first post so hopefully i've posted in the right place.

I'm looking to buy a new build property this year using the Help 2 Buy Equity loan, I've had an extensive look at the non new build properties locally to me however my requirements for location (being able to work to work in stead of driving) and having off street parking (my local council oversell residents permits for the number of spaces that are available) don't seem to be met by my budget if I don't go down the Help 2 Buy route.

The houses that I went to look at a weekend or so back are due to be released in the next few months to be reserved and should be completed towards the end of the year or early next year.

The phase 1 houses, which were semi-detached rather than a terraced run of 3 were £235k, and although they haven't confirmed the price of the next batch of homes to be released I'm working on that they'll be priced similarly.

In terms of affordability I should be able to achieve a mortgage of £126-£133k based on my £28k salary. The only debt/outgoing that I have is £50 per month for my car lease (which appears on my credit file under a Balloon HP (if that helps) which runs to 2020 - I paid a large chunk up front to have a smaller monthly outgoing - £50 per month was the minimum they would allow the payment to be.

However when putting the details into the Help 2 Buy Calculator spreadsheet i don't meet the affordability for the 20% equity stake based on my deposit of £62k, I would need to increase the deposit to £64.7k which would be a stretch (although i'm not saying its un-doable)

My mortgage broker doesn't seem to think there will be a problem, but I'm one of those people that likes to make sure I completely understand everything and and as such am worrying and trying to think of other options.

One thing I noticed is the calculator bases things on the 2017-2108 tax year for income (basic salary after tax comes in at £1860 rather the £1869, I know its only a small difference but does anyone know if they will update this figure?

I appreciate I'm borrowing at the top of my limit, however the repayments will be considerably less than my £800 per month current rent at between £435-£450 per month allowing me to over pay considerably or save to repay the Equity loan.

The way I see it my options are:

1 - Get my work to give me a pay rise (If I feed £28,600 in to the calculator its fine)
2 - Return the car (something i'd like to avoid but at the end of the day I'd rather have a house)

If I was to return the car would I need to do this before applying for the Equity loan or could I do it before I complete on the purchase?

A third option (and I don't know how if this would be seen or perceived as dodgy but as I write this I think it might be) would be rather than my parents give me some money for legal fees etc they make the repayments on the car instead?

Sorry for the long post but any thoughts would be welcome.

Thanks in advance

kingstreet

A new HTB calculator is released each year. The 2017 version is still current.

Most lenders accept repayment of credit "on or before completion" to ignore it for affordability.

If the car payments are in your name, it makes no difference if your parents give you the money. The liability remains yours.

If there is any red on the HTB calculator, the amount you have requested won't be granted, regardless of what a lender might be prepared to lend.

SwindonPaul

Thanks for taking the time to reply Kingstreet, I really appreciate it.

It seems like i'm right to worry then - though I'm glad it came to light now and so I can do something about it.

I was more clutching at straws with the car payments, I didn't think changing the account the payments were coming out of would make a difference as the agreement is in my name.

Where I fall down at present with £62k as the deposit is on the income multiple i hit 4.6 rather than the 4.5, to get it down to 4.5 I'll need to do some extra saving and have a conversation with my boss hopefully there could be a mix between the two, even a £300 per year means that I would need to put in an extra £1,400 rather than £2,700.

Now all that will happen is the houses that I've decided I like will be priced just that little bit too high!

Thanks again.