Mortgage Affordability + HTB Equity Loan

JayBeeFrog

I am sure this has been discussed already but I couldn't find clarification after searching.

Would getting a Help to Buy Equity Loan affect the amount a mortgage lender is willing to give me?

After all, in the sixth year I'd start paying out a relatively hefty annual fee for the loan, which would presumably affect my mortgage affordability, right?

For example, I have an agreement in principle for £260,000 from Barclays, but no questions were asked regarding any government loan. So, if I were to get a £76,000 equity loan (20% of the property value), should I expect to see the figure of £260,000 reduced, to take into consideration the annual fee of £1,300+?

Thanks for the help.

Tomg84

We've just about to take a mortgage with an equity loan and our mortgage provider (Halifax) did take the equity loan into account when doing affordability.

Can't recall how much as our mortgage broker took care of all that

kingstreet

Yes.

Typically 3% of the equity loan is taken as a cost in mortgage affordability resulting in the amount you can borrow reducing.

JayBeeFrog

Thank you for the replies, so if I were to get a £76,000 equity loan, I'd be looking at £2,280 per year as an added expense to factor in.

Tomg84

In a word - yes. It will be factored in mortgage affordability.

I'm sure you are but do remember to have a plan to repay the equity loan.

kingstreet

It will actually be £110 per month in year six, 1.75% of the loan amount.

Lenders use 3% for the affordability "headroom" check.