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Help to Buy Equity Loans guide discussion

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  • dhokes
    dhokes Posts: 302
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    T2808 wrote: »
    Recently applied to Nationwide with a 20% equity loan and a 9% deposit and was calculated as applying for a 88% LTV and declined! Absolutely crazy.... thought the benefit of the equity loan and low deposit was a reduced LTV ratio.

    If that is the case then Nationwide who welcome help to buy applications are making massive mistakes.


    Surely that would mean you need a 71% LTV mortgage? Did you apply directly or via a mortgage broker?
  • kingstreet
    kingstreet Posts: 38,691
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    Nationwide takes the "net" purchase price after deducting the HTB equity loan. Their money, their rules...

    Other lenders don't.
    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.
  • Hi

    Really confused and upset, requested to pay off our equity loan with Target in full due to inheritance and saving really hard to find it’s super complicated.

    Had to pay for RICS report then Target want £200 admin fee to get it started and also instruct a solicitor all adding up very quickly.

    get the letter from Target confirming amount they want from us but the really upsetting bit is in the letter they say on top of the 60K they want £2.60 day interest. If this is the case I feel we have been grossly miss sold as we were led to believe absolutely no interest in 1st 5 yrs of the equity loan and not told would be charged 5 yrs interest at £2.60 if did pay up before our 5yrs were up.

    Solicitor doesn’t seem to be on the ball either with this which is even more upsetting as response I got when questioned this was -

    Having taken instruction on this matter the agreement you have of 5 yrs interest free means that you are not paying interest for 5yrs but the interest does accrue on the loan during that period to be repaid at a later date !!!!!! So why was this not explained at point of taking this equity loan by broker,builder or H2B? All very underhand and no paperwork from anyone saying this.

    Advise please !!!128561;
  • kingstreet
    kingstreet Posts: 38,691
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    That sounds like an instruction to a solicitor to add £2.60 a day if the target redemption date is missed for some reason.

    It's not (AFAIK) £2.60 a day for the time you've had the loan!

    None of our clients who have redeemed HTB Equity Loans has ever mentioned this, so I suspect you have misunderstood

    From Target's current redemption pack;-

    https://www.myfirsthome.org.uk/wp-content/uploads/2016/05/CUSTINFO-Approved-04May2018.pdf
    Redemption letter

    On receipt of your loan redemption form, fee and valuation we will produce a redemption letter. This will be sent to both yourself and your solicitor. Your solicitor will also receive a guidance pack and a copy of the required form of legal undertaking to be submitted at least 15 business days prior to completion.

    The redemption letter will include your estimated repayment figure based on the valuation (please see the explanation below of how the redemption figure is reached for a sale and staircasing scenario)

    If you are redeeming through a house sale the letter will also include any arrears to be cleared and an indication of your interest payment daily rate to enable your solicitor to calculate any interest due from your last payment to your expected completion date.

    Full details will be issued to your solicitor in the guidance pack; however you must be aware of the requirement for a legal undertaking to be submitted to target 15 business days prior to any set completion date.
    You have to remember, the scheme started in April 2013 so there are people now making their first year's fee payments and this takes that into consideration. Any mortgage lender when providing a redemption statement includes a daily rate for an overshot completion.
    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.
  • Hi Kingstreet,
    The simple answer is guess work, I did a number of calcs looking at different property values and used a growth projection from Savils for one. Even the most pessimistic of views for the next 5 years only predict a stagnation of prices, and looking at what has happened in the area around where we are buying the values of new builds have been selling for more then original price 12 to 24 months on (its part of a large regeneration project spanning several years) so I looked at what I believe to be worst case and best case and figure we will be somewhere below the middle of those.

    Your right we could face a drop in house value but I consider that to be a calculated risk and relatively small given the potential rewards. I should also probably point out I'm talking about outside of London.
  • kingstreet
    kingstreet Posts: 38,691
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    Buying in MK10 by any chance?
    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.
  • Not quite, a little further south. Thank you for your comment though I've spent the last 30 minis considering a drop in value which I hadn't done before.
  • CrispyUK
    CrispyUK Posts: 230
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    Has anyone who is now in year 6 had confirmation from Target HCA of their interest payment amounts/dates?


    I purchased using Help to Buy in June 2013 so now starting repayments, Direct Debit is set up and they've taken a payment but no idea how they've worked it out. Seems slightly iffy on the DD guarantee also if they're just taking money without providing a payment schedule.


    Had loads of letters & direct debit forms from Target but nothing specific with amounts/dates. Not managed to speak to them yet as haven't managed to stay on the phone long enough to get past the long hold queues :)
  • sal_III
    sal_III Posts: 1,953
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    CrispyUK wrote: »
    I purchased using Help to Buy in June 2013 so now starting repayments, Direct Debit is set up and they've taken a payment but no idea how they've worked it out. Seems slightly iffy on the DD guarantee also if they're just taking money without providing a payment schedule.
    No, you are starting to pay interests on the loan, not repayments. Major difference.

    They are based on the original amount borrowed (not the repayment value of the loan which is % of the sale price). For the 6th year they are 1.75%, then increase by RPI + 1%

    For example if the RPI is 5% the interests for the 7th year will be 1.75*1.06=1.855, so 1.86%
  • CrispyUK
    CrispyUK Posts: 230
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    sal_III wrote: »
    No, you are starting to pay interests on the loan, not repayments. Major difference.

    They are based on the original amount borrowed (not the repayment value of the loan which is % of the sale price). For the 6th year they are 1.75%, then increase by RPI + 1%

    For example if the RPI is 5% the interests for the 7th year will be 1.75*1.06=1.855, so 1.86%


    Sorry, poor choice of wording in my original message, I know all the above but should have said interest payments rather than repayments.



    My issue/query was more regarding the service provided by Target HCA, has anyone else on Help to Buy had a schedule of interest payments from them and mine has gone astray, or are they just a bit rubbish?


    My loan is £33,700 and they've taken an interest payment of £6.55, hence the confusion as I was expecting it to be closer to £50/month in the first year!
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