First Time House Hunter - HTB and Lending Questions

GeneGenie87

Hi all,

First time house hunter with some rookie questions;

1) If a mortgage lender says they will lend me £x does it include my deposit?

e.g. they will lend me £100k is this £90k from them and £10k from me or £100k + £10k (therefore increasing the value of properties I can look at).

2) Does a help to buy loan on a new property allow you to purchase a more expensive house?

e.g. they will lend me £100k, HTB gives me £26k (20%ish), deposit £7k (5%ish) = £133k

OR

e.g. they lend me 75k, HTB gives me £20k, deposit £5k

Apologies I hope I've made sense

whatdoyouthink...

1) Your mortgage doesn't include your deposit
2) Technically yes, so long as you pass all the relevant affordability checks.

eddddy

GeneGenie87 wrote: »

e.g. they will lend me £100k, HTB gives me £26k (20%ish), deposit £7k (5%ish) = £133k

OR

e.g. they lend me 75k, HTB gives me £20k, deposit £5k

If I understand your question correctly, based on the numbers you mention, you can afford the first option...


You buy a house for £133k, and you fund it as follows:

• £100k (75%) borrowed from the bank (that is your mortgage)
• £26k (20%) borrowed from the government (the HTB scheme)
• £7k (5%) from your savings (that's misleadingly called your deposit)

Constraints include:

• The amount the bank will lend you as a mortgage (it's based on affordability)
• The amount you have in savings (you need at least 5% of the property purchase price)

Plus you will need more savings to pay a bunch of other costs associated with buying a property.

kingstreet

HTB and lender affordability are different things and you will need to "pass" both calculators, taking the lower output of the two for proceedability.

A standard mortgage will usually give you higher borrowing power than an HTB mortgage because lenders take into account the future HTB loan cost.

You have to balance this with the increased deposit on a newbuild on HTB.

Borrowing power = mortgage.

Purchasing power = mortgage + deposit (+ HTB).