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Help to Buy - How Much Can You Borrow

If you’re looking for a help to buy, find out how much you can borrow

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By Pete Mugleston   Mortgage Advisor

Last updated: 18th June 2019 *

Every day, we receive countless enquiries from customers wanting to know more about the Help to Buy Equity Loan, a government-funded scheme designed to help prospective buyers get a leg onto the property ladder.

Many people want to know what mortgage they can afford with Help to Buy. We’re often asked questions like “how much could I borrow with a Help to Buy Equity Loan?” and “what are the Help to Buy mortgage affordability requirements?”

Fortunately the experts we work with have helped hundreds of people successfully arrange a mortgage via this scheme. You can make an enquiry here for a free, no obligation chat with a Help to Buy specialist.

In the meantime, take a read of this guide where we’ll be covering the key information about Help to Buy affordability and how much you can borrow:

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How much can I borrow with a Help to Buy mortgage?

For Help to Buy England and Wales’s 20% Equity Loan assistance, you must take out a mortgage for at least 25% of the property’s value. The mortgage and your cash contribution combined must be a minimum of 80% of the full purchase price.

How much can I borrow with a Help to Buy equity loan if I live in London?

For London Help to Buy 40% equity loan assistance, your mortgage must account for at least 25% of the value of the property you wish to purchase. Together, the mortgage and your cash deposit must be a minimum of 60% of the purchase price.

In order to eligible to borrow a mortgage using Help to Buy, the maximum full purchase price of the property is £600,000 for London and the rest of England and Wales.

What is the maximum I can borrow through the Help to Buy scheme?

You may be wondering whether there is a maximum amount you can borrow under the HTB scheme. In the past we’ve been asked “can you borrow 100,000.00 from the government Help to Buy?”

We’ve covered how much the full purchase price of a property can be if you take advantage of HTB - but what does that equate to when calculating the exact amount you may potentially borrow?

The maximum you can borrow from Help to Buy in England and Wales is £120,000, and up to £240,000 in London. So, if you were to put down the minimum deposit of 5% on a £600,000 property, you could borrow £120,000 using Help to Buy England and Wales.

This is what the breakdown would look like this:

Purchase price
£600,000
(100%)
Mortgage required
£450,000
(75%)
Deposit required
£30,000
(5%)
Total buyer contribution
£480,000
(80%)
Help to Buy England Equity Loan
£120,000
(20%)

What are the Help to Buy mortgage affordability requirements?

Provided you meet the general HTB criteria, there are also certain financial requirements, as with any mortgage application.

First off, you must provide a cash deposit, which needs to be a minimum of 5% of the purchase price. If you’re looking to maximise your contribution, it is possible to put down up to 65% deposit and use the minimum 10% HTB Equity Loan and minimum 25% mortgage.

So, how much Help to Buy mortgage can I get?

When you complete your HTB application, you are required to provide details of your proposed purchase, main mortgage, deposit, and your household income. How much you can borrow with Help to Buy is capped at 4.5x your household income, and your monthly outgoings must not exceed 45% of your net disposable income.

The scheme offers a calculator that you must fit on in order to obtain the loan. Irrespective of how much a mortgage lender will give you, this calculator is what decides what your maximum mortgage is.

When buying a HTB home, it’s important that you’ve made arrangements to ensure you can keep up with your repayments if your financial circumstances change. Seek advice from a specialist before you commit to anything.

Having a strategy in place to pay off the equity loan is equally important.

When buying a HTB home, it’s important that you’ve made arrangements to ensure you can keep up with your repayments if your financial circumstances change. Seek advice from a specialist before you commit to anything.

Help to Buy costs and repayment terms

A monthly management fee of £1 is payable to Homes England from the start, right up until the loan is repaid. After the first five years, you will pay an additional fee as interest of 1.75%, which will rise annually in line with the Retail Price Index (RPI) plus 1%.

The HTB Equity Loan must be repaid within 25 years, or earlier if you sell your home. If you do sell, you will be required to repay the same percentage of the proceeds as the initial loan (so the more you borrow, the more of the proceeds you will have to part with - so factor this in when you’re budgeting).

Speak to a Help to Buy mortgage specialist about H2B affordability

If you’re not certain whether this scheme is suitable for you, or if you’re still wondering how much Help to Buy can I borrow?don’t panic. For a no-obligation chat with a HTB specialist, give us a call on 0800 304 7880 or make an enquiry.
The experts we work with will give you impartial advice as to whether HTB is a suitable option and how much you can expect to borrow. We don’t charge a fee, and you needn’t worry about it affecting your credit rating.

Updated: 18th June 2019
OnlineMortgageAdvisor 2019 ©

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

Find out more about Help To Buy

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