Question about Help to Buy variable rate

con_67

Hi there, first time buyer here looking at buying in the near future. I have a question about the Help to Buy sustainability calculator, and particularly the assumed 4.8% follow on rate. Apparently this was reconsidered in May to account for the Bank of England cutting the base interest rate but remained at 4.8% in the calculator. This has obviously impacted my debt-to-income ratio in my application. However, looking at mortgages separately most seem to offer a variable rate of 3.5%, making monthly repayments after the initial term well below those assumed in the calculator. Is there another reason why the calculator is keeping the rate at 4.8% (am I misunderstanding what it represents) or is this correct and mortgage brokers are using an ‘outdated’ calculation for the debt-to-income ratio than the market is offering? And does anyone have any advice going forward?
I’m interested in a particular flat through HTB as I’m at the beginning of my career and expect my next progression to be a beneficial one relative to the price of the mortgage, especially at 3.5% SVR.

amnblog

The follow on rate is the H2B calculator is set by the scheme administrators. Mortgage brokers are not using an outdated calculation - they do not decide the calculation.
Two other factors to bear in mind
1. A Flat means service charges and ground rent, and these often kill of the H2B affordability before it starts
2. Some specialist lenders have reversion rates above 4.8% and in these cases the follow on rate is the H2B calculator is matched and affordability gets very tricky.
Step one with any H2B case is to make sure the H2B equity loan affordability works by referring to someone who knows what they are doing with it (i.e a broker).

con_67

Thanks for getting back so quickly! I know that they don’t set the calculation - as I said according to the gov.uk website it was reconsidered in May.
Thanks for the note on houses; whilst a house would be preferable I’m not sure how feasible that would be in London (should have mentioned that is where I am based).
As to the second point, looking separately I’ve seen some with SVRs of >4.8% but also many below specifically for Help to Buy hence the question. I do plan on going with a broker but thus far haven’t explained that apparent disparity in the calculator.