Obtaining a required amount for a help to buy mortgage

Areya

Hello

I contacted a mortgage advisor which, was no help at all, I had to send an email repeating the question for an answer and then another email which he has now ignored. He also failed to initially ad my additional income and had to ask if he took that into account. I fear due to my affordability, he sees me as a waste of time. He said based on my salary we know a lender will be willing to use, your maximum purchase price will be around £195,000 (took consideration to my expenses) due to the help to buy income multiplier criteria. He seems to use a formula: salary x 4.5 plus 40% government loan to determine the total purchase price.

So, I was wondering if you could answer quite a few questions as I am losing hope and feel very stressed out.

Basically, I am interested in purchasing a London property that costs £261,495.

If my calculations are correct,  5% deposit is £13,075, 55% Mortgage required is £156,897 and 40% Government loan is £104,598.
My affordability according to my salary (x4.5) is £147,150. So this sum plus my deposit of £13,075 =£160,225

Are my calculations and terms according to HTB correct? Does this mean I can get a mortgage to purchase the property? He seems to be saying I can only purchase a property that totals to £195,000. In that case, there is nothing I can buy.

Also, do I have to use a mortgage advisor or broker, as it seems better to find my own mortgage? It would be great if there is a place/company I can seek advice and information.

Many thanks in advice.

Areya

Hello

I'd be really grateful if anyone could provide with me some answers

many thanks

Areya 

kingstreet

We can't answer. You need to run the London HTB affordability calculator for yourself then run lender affordability calculators for the mortgage. The LOWER of the two outputs is what you will be able to pursue. Ignore income multiples, they are simply an over-arch. Credit commitments, ground rent and service charges and the future cost of the equity loan have to be factored-in.

yvmilne

If using HTB we were told we had to use a broker - change broker 

trex227

https://www.gov.uk/government/publications/homes-england-help-to-buy-equity-loan-calculator-and-guidance

There are 2 excel spreadhseets on the above link, London/non London. Select the one thats applicable to you and plug all your figures in. I just put in some made up some figures and if you fill out all the boxes (put 0 if not relevant) it tells you whether you meet affordability.

onetimeatponycamp

Use the downloadable spreadsheet here: https://www.gov.uk/government/publications/homes-england-help-to-buy-equity-loan-calculator-and-guidance
For HTB, you need to pass affordability checks for both the mortgage and also the HTB scheme itself. The HTB scheme rules are a bit stricter I believe. For a mortgage advisor/broker, find someone who understands HTB.

onetimeatponycamp

I quickly plugged in your salary, purchase price etc. into the spreadsheet above and it looks like you unfortunately won't be able to afford it as it won't pass affordability criteria for the HTB loan The debt to income ratio comes out too high.

I think your options are either to look further afield for a cheaper property, or maybe look at shared ownership. 

Miranda25

onetimeatponycamp said:

I quickly plugged in your salary, purchase price etc. into the spreadsheet above and it looks like you unfortunately won't be able to afford it as it won't pass affordability criteria for the HTB loan The debt to income ratio comes out too high.

I think your options are either to look further afield for a cheaper property, or maybe look at shared ownership. 

Why not? Please see the image attached. It looks like the property is affordable?

ChloeManoey

I know for shared ownership, your outgoings (rent, mortgage, service charge) cannot be more than 45% of your monthly take home pay. 

Could this be the issue? Not sure if it's the same for the equity loan. 

ChloeManoey

I've just checked and yes that seems to be the case - based on the numbers you've given, you'd be looking at a limit of about £860 a month 

Miranda25

onetimeatponycamp said:

Use the downloadable spreadsheet here: https://www.gov.uk/government/publications/homes-england-help-to-buy-equity-loan-calculator-and-guidance
For HTB, you need to pass affordability checks for both the mortgage and also the HTB scheme itself. The HTB scheme rules are a bit stricter I believe. For a mortgage advisor/broker, find someone who understands HTB.

Sorry, in this excel spreadsheet what do we have to put into "monthly loan/HP payments" please- would it be from column "mortgage" £899.02 and positive or negative figure? As soon as I insert £899.02 then debt to income ratio changes from 54% to 92%? If I put (-899.02) then debt to income ratio goes down to 38% and then it is affordable for example given?