Help to Buy Equity Loan Mortgage: Going Direct to Lender

[ThomserveBAS]

Thanks Power Mortgages LTD - very helpful

The chappy from FF emailed me back this morning to say he had only caught part of my voicemail and that I was indeed right about the HTB Equity Loan Scheme only needing 5% deposit (the remainder made up from the equity loan).

The wheels have come off this morning anyway as despite being told we could part-ex and use the Help to Buy scheme, despite my reservations that you could, despite the agent arranging a valuation today, it looks like you cannot in fact part-exchange with (any variant of) the Help to Buy scheme.

NewBuy did allow part-ex but the part-ex scheme only lasted 6 months in 2013 apparently.

Man this is stressful.

[Power Mortgages Ltd]

One advantage in using a broker is that they know who to talk to at a given mortgage provider. If you go direct (e.g. to a local branch), there's a very good chance you'll end up talking to someone that has no real understanding of contractors, even if they are "contractor friendly", in theory. If they put your application together incorrectly, that could be a costly mistake.

Exactly WJBS.

I have lost count of the number of clients who have come to me after approaching Halifax direct. Given that it is part of their own lending criteria, it is amazing how many times Halifax branch/phone advisors get it wrong when it comes to contractors. The problem is that it is such a small part of their criteria and the vast majority of clients they deal with are permanent employees or what I refer to as 'true self employed' where they may be sole traders and income is calculated on the basis of their net profit, or Limited Company Directors where income is defined as their salary and dividends both often meaning the income they regard you to be earning is less than your contract annualised day rate.

If you contract through your own Limited Company then they tend to latch on to that side of things and will push you down that route as it is normally all they understand. You could be lucky and get an Advisor who knows the criteria but is it worth risking when the end result could be that you end up losing the only option you have to buy the property assuming you cannot prove your income in the conventional manner and have to be assessed based upon a multiple of your contract rate annualised?

On top of that it is time you will have to spend making appointments, chasing them up, providing them with all the information and responding to all the questions they have throughout the mortgage process. A broker will obviously take all that hassle away from you and manage any questions or complications, often without you needing to know or get involved. How much is the time you will have to dedicate to that worth? If the whole process takes a day and your day rate is £500 for example then you have effectively paid a broker fee in your time anyway as well as the worry and concern that brokers can often effectively manage for you.

Halifax do need a 20% deposit for new build properties but that does not apply if you are buying a new build property utilising the help to buy scheme. In this situation Halifax only need a 5% deposit from you which as you correctly state, when added to the equity loan of 20%, gives you a 25% deposit.

Hope that clears it up for you?

FF can amend the existing decision in principle relatively easily and the new search Halifax will need to do will override the existing search which has been done meaning you will not have another (albeit soft) footprint on your credit file.

I'd advise amending the decision in principle as soon as possible though as Halifax do have slightly more strict credit scoring requirements for the help to buy mortgages so you do not want to go and pay a reservation fee most new build developers ask for only to find out that when you ask for the decision in principle to be amended, Halifax are not able to assist.

Hope that helps?

[jamesbrown]

Not jumping to conclusions, just exploring options. It was clear what they said; I need a 20% deposit for a new build - now we know that isn't true so as above it's probably a misunderstanding on their part.

Point taken on going direct - but that's why I asked for opinions/experiences.

You know what it's like (I assume) when the other half is badgering you about moving, and getting the "news" that we'd need 4x the deposit we actually have available...just wanted to see if anybody had gone direct with any success (seems to be hit and miss on the forums so for now I'll see what FF come back with tomorrow).

Fair enough. I guess I didn't really follow why you'd started calling around other brokers, but I guess if you're exploring options...

I'd be surprised if FF had got their info. wrong, though, so perhaps it's just in the phrasing. Anyway, you can report back...

[ThomserveBAS]

So Freelance Financials can't help you any further? I would have thought they were the best people to go to to secure the contractor element of the offer. I would be surprised if any old broker can get the contractor options and if they can know enough about contracting to do a good job of it.

Worth speaking to FF again? They were spot on for me with the Halifax deals but I don't know about the Help to Buy.

I've got a call with them in the morning so fingers crossed it's a misunderstanding on their behalf.

Yes, agree with NLUK, you should wait until FF have actually explained what they mean. No sense in jumping to conclusions until you've understood what they're saying. One advantage in using a broker is that they know who to talk to at a given mortgage provider. If you go direct (e.g. to a local branch), there's a very good chance you'll end up talking to someone that has no real understanding of contractors, even if they are "contractor friendly", in theory. If they put your application together incorrectly, that could be a costly mistake.

Not jumping to conclusions, just exploring options. It was clear what they said; I need a 20% deposit for a new build - now we know that isn't true so as above it's probably a misunderstanding on their part.

Point taken on going direct - but that's why I asked for opinions/experiences.

You know what it's like (I assume) when the other half is badgering you about moving, and getting the "news" that we'd need 4x the deposit we actually have available...just wanted to see if anybody had gone direct with any success (seems to be hit and miss on the forums so for now I'll see what FF come back with tomorrow).

[jamesbrown]

Yes, agree with NLUK, you should wait until FF have actually explained what they mean. No sense in jumping to conclusions until you've understood what they're saying. One advantage in using a broker is that they know who to talk to at a given mortgage provider. If you go direct (e.g. to a local branch), there's a very good chance you'll end up talking to someone that has no real understanding of contractors, even if they are "contractor friendly", in theory. If they put your application together incorrectly, that could be a costly mistake.

[northernladuk]

So Freelance Financials can't help you any further? I would have thought they were the best people to go to to secure the contractor element of the offer. I would be surprised if any old broker can get the contractor options and if they can know enough about contracting to do a good job of it.

Worth speaking to FF again? They were spot on for me with the Halifax deals but I don't know about the Help to Buy.

[ThomserveBAS]

Hi

We are fast outgrowing our 2-bed terrace and baby ThomserveBAS will need her own bedroom (which is currently my office/server room) so we are on the prowl for a new house.

We had a viewing of a new build on Saturday which is on a development which is part of the Help to Buy Equity Loan scheme. We already had a mortgage in principle with Freelancer Financials but that was for a non-new build on the Help to Buy Mortgage Guarantee scheme so wouldn't cover the new build. I contacted my mortgage broker this evening and he left a message which mentioned a 20% deposit for new builds which has disturbed me a bit because from what I can see - Help to Buy Equity works out as 5% customer deposit, 20% government loan and 75% mortgage so not sure which 20% he was on about.

Anyway, having spoken to a few brokers today, it seems that Halifax are the only provider who are both contractor friendly and offering the Help to Buy schemes so it crossed my mind to try going direct with them and wondered if anybody had any experience (especially in the Help to Buy Equity arena).

I know the developer offers the scheme, I know Halifax offers the scheme, I know Halifax are "contractor friendly" but the bit I'm missing is a broker to tie it all together or some advice on whether it's worth me turning up at my appointment with Halifax on Saturday and go direct with them.