Mortgage Affordability + HTB Equity Loan

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JayBeeFrog
JayBeeFrog Posts: 11 Forumite
in Mortgages & endowments
I am sure this has been discussed already but I couldn't find clarification after searching.

Would getting a Help to Buy Equity Loan affect the amount a mortgage lender is willing to give me?

After all, in the sixth year I'd start paying out a relatively hefty annual fee for the loan, which would presumably affect my mortgage affordability, right?

For example, I have an agreement in principle for £260,000 from Barclays, but no questions were asked regarding any government loan. So, if I were to get a £76,000 equity loan (20% of the property value), should I expect to see the figure of £260,000 reduced, to take into consideration the annual fee of £1,300+?

Thanks for the help.

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  • Tomg84
    Tomg84 Posts: 62 Forumite
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    We've just about to take a mortgage with an equity loan and our mortgage provider (Halifax) did take the equity loan into account when doing affordability.

    Can't recall how much as our mortgage broker took care of all that :)
  • kingstreet
    kingstreet Posts: 38,768 Forumite
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    Yes.

    Typically 3% of the equity loan is taken as a cost in mortgage affordability resulting in the amount you can borrow reducing.
    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.
  • JayBeeFrog
    JayBeeFrog Posts: 11 Forumite
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    Thank you for the replies, so if I were to get a £76,000 equity loan, I'd be looking at £2,280 per year as an added expense to factor in.
  • Tomg84
    Tomg84 Posts: 62 Forumite
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    In a word - yes. It will be factored in mortgage affordability.

    I'm sure you are but do remember to have a plan to repay the equity loan.
  • kingstreet
    kingstreet Posts: 38,768 Forumite
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    It will actually be £110 per month in year six, 1.75% of the loan amount.

    Lenders use 3% for the affordability "headroom" check.
    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.
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