Transfer of Equity / increasing Help to Buy share of equity

sonaldo

My partner and I recently bought a new build flat in London with Help to Buy. The latter have 35% of the equity (i.e. 5% less than the maximum). 
We recently discussed how we might transfer equity to one of us in case we don't stay together, i.e. removing one of our names from the mortgage. 

The problem is, I doubt either of us would pass the lender's affordability checks (as the mortgage is about 7x our individual incomes). 
So, I wondered if the lender would consider a Transfer of Equity provided we could reduce the existing mortgage (through a one-off payment) to an acceptable amount (i.e. 3.5-4.5x our individual incomes)? 
Secondly, is it possible to increase the Help to Buy equity share from 35 to 40%, and use proceeds of that to pay down the mortgage? 
Thanks for any help.

sal_III

No, you can't. It's called Help To Buy, not Help To Remortgage. Even if it was possible it wouldn't help you for a number of reasons, the main one being that you can't transfer ownership with the equity loan in situ.

sonaldo

sal_III said:

No, you can't. It's called Help To Buy, not Help To Remortgage. Even if it was possible it wouldn't help you for a number of reasons, the main one being that you can't transfer ownership with the equity loan in situ.

Thanks for your comment. Appreciate you cannot increase the Help to Buy share - that was a long shot. 
However, I know for a fact that a Transfer of Equity is possible. My question is whether the outstanding mortgage would have to be reduced before the Transfer (so that one of us could afford the repayments), or whether the Transfer could occur, and then the mortgage paid down to an acceptable level? 

sal_III

Ahh seems I had it wrong and you can remove a party from the agreement. Had it mixed up with adding party to it, which isn't possible. Do they carry on affordability checks at that point? Because theirs are more onerous than the mortgage lenders since they base the calculations off a SVR mortgage rate of 4%+

Other than that and reducing the pool of potential lenders that are happy with HTB remortgage, as long as you can find the funds to finance the 65% of the equity I don't think that the HTB equity loan is a factor.

I know that a hand full of lenders allow 2 names on the mortgage with a single owner, but I don't think either of you will be happy with such arrangement. So if you can't afford borrow the outstanding balance of your mortgage on a single income, I don't see a workable solution.

MovingForwards

This is something you should have thought about, and had legally drawn up, before buying.

It's a strange conversation to be having after the event.

Possibly best asking on the mortgage board as that's where the brokers hang out.