Does the equity loan improve mortgage deals?

dakofsta

Sorry if this question is silly, I am very new to reading about mortgages and the ways I can be aided by the government.

As a recent graduate, I hope to move out of my house and buy a flat in London within the next 2-4 years. I am maximising my Lifetime ISA contributions, with savings elsewhere to give me, at least, a 5% deposit on all houses eligible for the Lifetime ISA (as I am capped at a new build of up to £450k, giving me a 5% deposit of £22,500).

If I use the help to buy equity loan, does the loan still mean I get 5% deposit deals? Or would the loan help me increase my deposit such that I'd get better mortgage deals?

Also, am I allowed to rent out rooms from the property (e.g. buy a three bedroom flat and rent out two rooms whilst living in the third) or does this count as a buy-to-let?

Thank you very much in advance for your help!

getmore4less

96% mortgage are rare now so not much option if you only have 5%
HTB 75% rates were a lot better than 95% rates(when they were available).

dakofsta

getmore4less said:

96% mortgage are rare now so not much option if you only have 5%
HTB 75% rates were a lot better than 95% rates(when they were available).

So it's unrealistic? Do I have to save a lot more so I can get 10%? And if I did save 10%, would I still need the help to buy loan? I don't really understand what advantage the equity loan gives

Angela_D_3

So there are about 50 95% mortgage available at the moment.  I applied for one on the 8th July,  still not back from the under writers yet that’s how busy they are.  4 x my salary,  cleanish credit its 50/50 if I’ll get it. 

The HTB increases your spending power but the price is inflated do you win in one hand and loose in the other. 

Hint you loose a lot more 

numbercruncher8

Help to buy ends in 2023. It may be extended, or it may simply be replaced with something else. 

By this time, I would expect in London that sentiment would have gone against these schemes. Anyone buying from 2017 onwards is most likely sitting on an uncrystallised loss at the moment. Part of that is because the housing market has not moved much in value, part of that being that the new builds which needed to be bought were inflated in cost and don't have the same resale value because the buying scheme cannot be used by the new purchaser.

The HTB component does not improve the mortgage per se, but it may allow you to purchase a place you would not managed to purchase otherwise. Whether that is a good thing or not is pretty debatable.

You can rent rooms out, but not if the mortgage is contingent on this income. To be fair i don't think currently there are any 3-bed new build flats in London without going to the outskirts or disliked areas.

kingstreet

A 75% standard mortgage would be at a better rate than a 75% HTB mortgage which would be at a better rate than a 95% standard mortgage.