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Having an existing mortgage and moving using help to buy loan?

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Having an existing mortgage and moving using help to buy loan?

edited 30 April 2020 at 5:38PM in Mortgages & Endowments
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lucy632lucy632 Forumite
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edited 30 April 2020 at 5:38PM in Mortgages & Endowments
Hi
I was just looking for some advice. I bought my first property approximately a year ago now and I am looking to sell it and I am a bit clueless about it. I have a mortgage which is portable and I used a 10% deposit- 85k is the value of the property.
6 months ago I wanted to sell and buy a new build which was 110k, but my lender said I would not pass affordability checks so I would have to look for something to a similar value as I currently have.
I have stayed and have recently been looking into HELP to buy equity loans.
I was just wondering several things- since my lender couldnt give me a larger mortgage, does using the help to buy loan make it possible to buy a more expensive place if my circumstances are still the same.
Or will my lender do the same kind of affordability checks when seeing whether I am eligible for this? 
If so are the checks just to see if i can afford the mortgage or do they look much further ahead at repayments of the loan etc? -(about 83k with a 5% deposit). 
Is it even possible to have an existing mortgage and switch to the help to buy loan/mortgage?
Sorry for all the questions , I would just like to know if this is possible in any way or not.  I appreciate any advice.

Replies

  • md258md258 Forumite
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    Why are you so keen to move again?
    What is the mortgage deal you're currently on (eg 2 year fix)?
    Is there an Early Repayment Charge on your current mortgage?

    A different mortgage company may lend you more, but once you've paid for the costs of moving, you'll have paid all your equity to estate agents/solicitors/hmrc(?) and have none left for the actual purchase.
  • kingstreetkingstreet Forumite
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    Although using a HTB equity loan may mean you can buy for higher price, often the amount you can borrow mortgage-wise is lower because a 4.5x income cap comes into play and lenders take usually 3% of the equity loan as a cost in mortgage affordability.
    As to the mortgage product. This varies from lender to lender. Remember it's the terms which may be portable not the actual mortgage so on the sale of your property, the mortgage is repaid. You will take out a new mortgage on the newbuild and may be able to port the terms, if allowed. Some lenders have no issue with HTB to non-HTB and vice-versa and others simply can't do it but may have an ERC waiver when remaining with them for the new mortgage.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
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