New government mortgage guarantee scheme

chasingfreedom

Hi there,
All week I've been impatiently waiting for the details on the new scheme to be released. 

Last September we almost purchased a new build on the help to buy equity scheme and got an AIP and passed HTB affordability but decided against it and didn't proceed. We wouldn't choose a new build but were attracted by the 5% deposit. A few weeks ago we looked into going for a cheaper house with a 10% deposit instead. Again we got an AIP from Natwest but they said they would want us to put down a 15% deposit because our outgoings are quite high. (They said affordability wasn't an issue though) We have a loan each plus my car is on pcp and we also have a credit card each. Not ideal but our income is good so we are easily managing it all with money to spare. A couple of years left and they'll both be gone. Based on what I've read we would be eligible for the new scheme, subject to affordability obviously but wondering if the same issue will apply or whether the guarantee scheme will help mitigate the risk of our higher outgoings? Could we just amend the AIP we already got or do we start over again? What do you think? (Obviously we'll also speak to a broker once they've had time to review the details)
Thanks for any advice/thoughts.

K_S

@chasingfreedom It's hard to say without knowing the details of the case and future criteria for NatWest 95% products. But generally speaking, if NatWest will only offer you a mortgage at 85% LTV, it's unlikely that you would qualify for a 95% LTV NatWest H2B mortgage guarantee product. 

chasingfreedom

K_S said:

@chasingfreedom It's hard to say without knowing the details of the case and future criteria for NatWest 95% products. But generally speaking, if NatWest will only offer you a mortgage at 85% LTV, it's unlikely that you would qualify for a 95% LTV NatWest H2B mortgage guarantee product. 

Thanks for your reply. I was hoping that the guarantee from the government might offset the risk as the guarantee covers the 80%-95% portion of the mortgage? Do you think it would be worth trying one of the other lenders who are participating once it launches? We have plenty of disposable income and passed the equity HTB affordability with no issue for a much more expensive house.

Thrugelmir

chasingfreedom said:

K_S said:

@chasingfreedom It's hard to say without knowing the details of the case and future criteria for NatWest 95% products. But generally speaking, if NatWest will only offer you a mortgage at 85% LTV, it's unlikely that you would qualify for a 95% LTV NatWest H2B mortgage guarantee product. 

 I was hoping that the guarantee from the government might offset the risk as the guarantee covers the 80%-95% portion of the mortgage? 

Normal lending criteria will still apply. The Government isn't going to underwrite risk on uncommercial terms. Nor are lenders exempt from following standard regulatory requirements or guidance. For borrowers the interest rates aren't going to highly attractive. A larger deposit will still be beneficial. 

K_S

chasingfreedom said:

K_S said:

@chasingfreedom It's hard to say without knowing the details of the case and future criteria for NatWest 95% products. But generally speaking, if NatWest will only offer you a mortgage at 85% LTV, it's unlikely that you would qualify for a 95% LTV NatWest H2B mortgage guarantee product. 

Thanks for your reply. I was hoping that the guarantee from the government might offset the risk as the guarantee covers the 80%-95% portion of the mortgage? Do you think it would be worth trying one of the other lenders who are participating once it launches? We have plenty of disposable income and passed the equity HTB affordability with no issue for a much more expensive house.

@chasingfreedom I wouldn't expect it to impact criteria to that extent. I think you are probably best off waiting for the new products to be launched and then approaching a broker to see what your options are. From what I hear, mainstream lenders are already well into preparing 95% products to release in April so you shouldn't have to wait too long.

ACG

The guidance released says "credit worthy". That is obviously open to interpretation and does not rule out tight affordability or adverse but if you are struggling to get a 90% mortgage, it will not get any easier applying for a 95% mortgage.

Although the government are backing the 95% mortgages, I would be surprised if we are in a position where you cant get 90% but you can get 95% - I can not imagine the FCA looking to favourably at that. 

Speak to a broker, it sounds like you should be able to get a 90% mortgage. 

chasingfreedom

Thrugelmir said:

chasingfreedom said:

K_S said:

@chasingfreedom It's hard to say without knowing the details of the case and future criteria for NatWest 95% products. But generally speaking, if NatWest will only offer you a mortgage at 85% LTV, it's unlikely that you would qualify for a 95% LTV NatWest H2B mortgage guarantee product. 

 I was hoping that the guarantee from the government might offset the risk as the guarantee covers the 80%-95% portion of the mortgage? 

Normal lending criteria will still apply. The Government isn't going to underwrite risk on uncommercial terms. Nor are lenders exempt from following standard regulatory requirements or guidance. For borrowers the interest rates aren't going to highly attractive. A larger deposit will still be beneficial. 

A larger deposit would be my preference too and we know the normal criteria still applies. The reason we have a smaller deposit it obviously partly due to our higher outgoings and the fact my youngest is at nursery so has been costing me over 1k a month for the last 3 years. The fees are reduced now and she starts school in September so that frees up more money immediately. We're in our early 40's so time isn't on our side in terms of saving for another few years etc. We want to get onto the ladder asap and stop spending dead money on rent.

chasingfreedom

ACG said:

The guidance released says "credit worthy". That is obviously open to interpretation and does not rule out tight affordability or adverse but if you are struggling to get a 90% mortgage, it will not get any easier applying for a 95% mortgage.

Although the government are backing the 95% mortgages, I would be surprised if we are in a position where you cant get 90% but you can get 95% - I can not imagine the FCA looking to favourably at that. 

Speak to a broker, it sounds like you should be able to get a 90% mortgage. 

Thanks for your reply. We are definitely credit worthy, both have good credit scores and no issues with affordability despite the higher outgoings. We had attempted to go for something much smaller/cheaper than we wanted to get onto the ladder when getting the AIP with Natwest. We obviously pass their lending criteria to get an AIP but they obviously viewed us as higher risk due to our outgoings so wanted a higher deposit. That's why i was hoping this might help us if the guarantee took some of the risk away. We had accepted we might not be able to buy until the scheme was announced so i used part of the deposit we had saved to clear some debt so we are now even further away from having 10%. We would need probably another 8k to get something valued at 200k which doesn't get you much in this area and then would be buying a house we don't really want that doesn't suit the size of our family. So frustrating. Obviously our outgoings are our own fault but they are well managed and will naturally decrease/disappear over the next few years. The only way I could reduce our outgoings is to downgrade my car which is on PCP and get something with a cheaper monthly cost. I'm currently paying 347 a month so could probably get something closer to 200 and would be prepared to do that but even if i stayed with the same dealer it would mean a new credit agreement and I'm worried that will impact my credit score and won't help us anyway?

Thrugelmir

chasingfreedom said:

Thrugelmir said:

chasingfreedom said:

K_S said:

@chasingfreedom It's hard to say without knowing the details of the case and future criteria for NatWest 95% products. But generally speaking, if NatWest will only offer you a mortgage at 85% LTV, it's unlikely that you would qualify for a 95% LTV NatWest H2B mortgage guarantee product. 

 I was hoping that the guarantee from the government might offset the risk as the guarantee covers the 80%-95% portion of the mortgage? 

Normal lending criteria will still apply. The Government isn't going to underwrite risk on uncommercial terms. Nor are lenders exempt from following standard regulatory requirements or guidance. For borrowers the interest rates aren't going to highly attractive. A larger deposit will still be beneficial. 

A larger deposit would be my preference too and we know the normal criteria still applies. The reason we have a smaller deposit it obviously partly due to our higher outgoings and the fact my youngest is at nursery so has been costing me over 1k a month for the last 3 years. The fees are reduced now and she starts school in September so that frees up more money immediately. We're in our early 40's so time isn't on our side in terms of saving for another few years etc. We want to get onto the ladder asap and stop spending dead money on rent.

You are the type of borrower the scheme is targeted at. 

chasingfreedom

Thrugelmir said:

chasingfreedom said:

Thrugelmir said:

chasingfreedom said:

K_S said:

@chasingfreedom It's hard to say without knowing the details of the case and future criteria for NatWest 95% products. But generally speaking, if NatWest will only offer you a mortgage at 85% LTV, it's unlikely that you would qualify for a 95% LTV NatWest H2B mortgage guarantee product. 

 I was hoping that the guarantee from the government might offset the risk as the guarantee covers the 80%-95% portion of the mortgage? 

Normal lending criteria will still apply. The Government isn't going to underwrite risk on uncommercial terms. Nor are lenders exempt from following standard regulatory requirements or guidance. For borrowers the interest rates aren't going to highly attractive. A larger deposit will still be beneficial. 

A larger deposit would be my preference too and we know the normal criteria still applies. The reason we have a smaller deposit it obviously partly due to our higher outgoings and the fact my youngest is at nursery so has been costing me over 1k a month for the last 3 years. The fees are reduced now and she starts school in September so that frees up more money immediately. We're in our early 40's so time isn't on our side in terms of saving for another few years etc. We want to get onto the ladder asap and stop spending dead money on rent.

You are the type of borrower the scheme is targeted at. 

I really hope so! I was quite hopeful before the other responses above that this might help us but sounds like the consensus is that because they asked for a higher deposit previously they would refuse us a 95% mortgage now. I will be gutted if that's the case. The scheme is running till the end of next year so the most we could do is try and clear some of our debt and maybe look to try next year instead but we are very unhappy in our current rental so hoped we had a glimpse of freedom, haha.

Thrugelmir

chasingfreedom said:

Thrugelmir said:

chasingfreedom said:

Thrugelmir said:

chasingfreedom said:

K_S said:

@chasingfreedom It's hard to say without knowing the details of the case and future criteria for NatWest 95% products. But generally speaking, if NatWest will only offer you a mortgage at 85% LTV, it's unlikely that you would qualify for a 95% LTV NatWest H2B mortgage guarantee product. 

 I was hoping that the guarantee from the government might offset the risk as the guarantee covers the 80%-95% portion of the mortgage? 

Normal lending criteria will still apply. The Government isn't going to underwrite risk on uncommercial terms. Nor are lenders exempt from following standard regulatory requirements or guidance. For borrowers the interest rates aren't going to highly attractive. A larger deposit will still be beneficial. 

A larger deposit would be my preference too and we know the normal criteria still applies. The reason we have a smaller deposit it obviously partly due to our higher outgoings and the fact my youngest is at nursery so has been costing me over 1k a month for the last 3 years. The fees are reduced now and she starts school in September so that frees up more money immediately. We're in our early 40's so time isn't on our side in terms of saving for another few years etc. We want to get onto the ladder asap and stop spending dead money on rent.

You are the type of borrower the scheme is targeted at. 

I really hope so! I was quite hopeful before the other responses above that this might help us but sounds like the consensus is that because they asked for a higher deposit previously they would refuse us a 95% mortgage now. I will be gutted if that's the case. The scheme is running till the end of next year so the most we could do is try and clear some of our debt and maybe look to try next year instead but we are very unhappy in our current rental so hoped we had a glimpse of freedom, haha.

Always helpful to have an incentive.  Reminds me of one of my favourite Chinese sayings. "A man who who wishes to move a mountain starts by moving the smallest stones first".