Moving from htb mortgage to standard

JamesN

Hi

We are looking at moving house soon. Currently in a new build but the area we want to go to has none. So we won’t be able to get another help to buy mortgage.

We will however be able to get a better rate on a mortgage as the htb rates aren’t exactly competitive even when I fronted up over 20% deposit myself.

So the question is, am I likely to be able to borrow much more? I could have £162k before which is now down to £156k (it’s a 40 year term). Given I won’t have the help to buy element as a cost I’m hoping that means I might be able to stretch it to £200k.

If it helps my current house was £300k new. Htb was £60k, mortgage as above and the rest was my deposit. My current rate is 2.34%. I’d be looking at a longer term mortgage with a view to overpaying as my wife is currently not working but will be looking to do so in a few years when the kids are in school.

Thanks in advance.

kingstreet

Affordability for your new mortgage depends on your circumstances now and has nothing to do with what went before.

You won't have 3% of the equity loan and service charge to take into account, but you will have dependent(s) and your wife's removed/reduced income to factor-in.

JamesN

Income has gone up about 9% in that time. My wife wasn’t working at that point either so no difference there. Based on that I’d hope I’d get more but we have one more child since then.

kingstreet

Try lender affordability calculators and see.

JamesN

They weren’t that reliable last time round. I’ll have to put that down to the htb affecting it.

Thanks for your help.

kingstreet

Typically, the only difference is you allow 3% of the equity loan as a cost when doing HTB affordability.

If that no longer applies, you wouldn't enter it. The remaining data should be exactly the same.

It would be the same if you wanted to see the impact on affordability of a £5,000 credit card balance. Put it in, take a note of the output. Take it out, take a note of the output. The difference is what the card balance is costing you in mortgage borrowing power.

The rate you are going to get is going to depend more on loan to value than affordability. A decent five year fix is between 2.0% and 2.5% depending on LTV so I don't see much scope for a lower rate that what you currently have.