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Help to Buy Mortgages

 

For Intermediary use only

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With effect from Monday 9th April 2018 Platform will participate in the UK Government's Help to Buy Shared Equity schemes in England (including London) and Wales for mainstream purchase applications.  Platform is unable to offer Help to Buy remortgage applications.

 

The schemes are available to buyers who are looking to purchase a new-build property, either as first time buyers or those moving home, and whilst they have the financial means to maintain their mortgage, they nevertheless experience difficulty in purchasing their desired property because of their inability to raise privately the required deposit. Platform’s participation in the schemes will therefore assist prospective purchasers by allowing them to take out also a Help to Buy Equity Loan by way of a second charge.

 

Submitting an Application

 

Before submitting a Help to Buy mortgage application, you must ensure your client has obtained the Authority to Proceed (ATP) document from their local Help to Buy agent/Help to Buy Wales Agency which must be provided prior to offer of the Help to Buy mortgage.

 

All applications are subject to Platform’s standard lending criteria along with the following requirements:

 

  • Minimum applicant deposit of 5% of the purchase price is required (excluding builder incentives).

 

  • Builders incentives are allowable up to 5% of the purchase price and must be declared on the UK Finance Disclosure of Incentives Form.

 

  • Gifted deposits are acceptable providing that the deposit is being funded by a non-repayable gift from a family member, declarations will be required.

 

  • Maximum LTI of 4.49.

 

  • As a responsible lender, Platform will assume a fee of 3% of the total Help to Buy Equity Loan as a monthly financial commitment.

 

  • The application must pass affordability taking into account the Help to Buy Equity Loan. 

 

  • Platform’s online affordability calculators have been updated to support Help to Buy lending criteria (the outcome does not constitute a lending decision).

 

  • Minimum lease term of 250 years on houses and 125 years on flats, as well as no onerous clauses in ground rent increments.

 

  • A re-inspection prior to completion will be required for all Help to Buy applications where the property is less than 75% completed on the date Platform’s valuer attends.  Platform will meet the cost of the re-inspection.

 

  • The applicant(s) must live in the new-build property as their main residence and must not own another property.

 

If the mortgage offer expires

 

Platform mortgage offers are valid for 6 months from the date of application.  This should align with the expectations of when the development will be completed and the property ready to complete, however if there is an unexpected delay with construction and the offer needs to be re-issued this can be considered as follows:-

 

  • A revised offer can be issued for a further 3 months

 

  • The customer needs to sign a new declaration form confirming their circumstances haven’t changed.

 

  • An up to date payslip will be required.

 

  • If the mortgage was at the maximum term for age or lending into retirement at the point of application, you are required to call Platform to discuss revised term requirements.

 

  • You can upload documents via Click and provide any further information via Ask Us in the usual way.

 

  • A new credit search will be completed by Platform and any changes to the customer’s credit file may affect the ability to extend.

 

  • Platform will confirm that the property valuation hasn’t changed

 

  • Platform can re offer on existing products even if they are withdrawn, if you want to change product you can complete and upload a PAAS form from the website.

 

Porting

 

The Help to Buy mortgages have a bespoke range of products. These products are not portable as the scheme finishes, and the equity loan needs to be repaid, upon either sale of the property or at the end of the mortgage term.  Any ERC applicable to the product would need to be paid if the mortgage is redeemed within the ERC period.

 

Product Switching

 

At the end of the initial product period, existing Help to Buy specific products will be available for your clients to switch onto.

 

If your client repays the equity loan during the mortgage term, at the end of the existing product period they would then be able to select a product from the mainstream range with all the standard conditions including the ability to port.

 

 

Additional Borrowing

 

The minimum equity loan repayment is 10% of the market value at the time of paying off the loan. The equity loan must be repaid upon either sale of the property or at the end of the mortgage term.

 

Your client can redeem the equity loan whenever they want to, however, they must have completed the mortgage at least 6 months earlier if they wish to take out further borrowing on their mortgage. Any additional borrowing to repay part or all of the equity loan will be subject to status and Platform’s lending criteria at the time and will require a re-valuation by Platform. All further borrowing will be available on Platform Standard Variable Rate only.  Your client must have spoken to the Help to Buy agent/Help to Buy Wales Agency and gained an Authority To Proceed prior to approaching Platform for the further borrowing request.  The ATP will need to be provided at the point of application.

 

Minimum further advance is £5,000 or 10% of the market value whichever is the higher.

 

New build LTV restrictions in place for the first two years – Houses 85% LTV & Flats 75% LTV, after 2 years standard criteria applies.

 

Any further lending on the mortgage would require permission of the Help to Buy Agent/Help to Buy Wales Agency and will likely be sanctioned on the basis of repayment initially of the HTB equity loan.   

 

A solicitor will be required to act on behalf of your client and Platform in repayment of the equity loan.

 

How does it work?

 

With the Help to Buy Equity Loan Scheme, your client requires a deposit of at least 5% of the full purchase price. The government then provides your client with an Equity Loan of up to 20% (or 40% under the London Help to Buy scheme) of the cost of the new-build home, interest free for the first 5 years. After 5 years your client will have to pay the interest on the Equity Loan.

 

The scheme is open both to first-time buyers and home movers purchasing a new-build property of up to £600,000, from a registered house-builder, as well as to those who wish to remortgage with another lender that offers HTB equity loans and accepts HTB equity loan second charges.

 

The scheme is administered by Local Help to Buy Agents who assess and approve all applications. To find a local Help to Buy Agent go to:

 

https://www.helptobuy.gov.uk/equity-loan/find-helptobuy-agent/

 

For more information (including advice on fees and paying back theloan) go to:

 

https://www.helptobuy.gov.uk/equity-loan/equity-loans

 

http://www.homesandcommunities.co.uk/helptobuy

 

https://beta.gov.wales/help-buy-wales

 

  Help to Buy mortgages product guide >  

 


 

The information contained within this section is for use by mortgage intermediaries authorised by the FCA.

Information is not to be disclosed or given to the public or is intended as a consumer advertisement as it does not provide APRCs or APRC Representative Examples.

 

The Co-operative Bank p.l.c. is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (No. 121885). The Co-operative Bank, Platform, smile and Britannia are trading names of The Co-operative Bank p.l.c., P.O. Box 101, 1 Balloon Street, Manchester M60 4EP. Registered in England and Wales No.990937. Credit facilities are provided by The Co-operative Bank p.l.c. and are subject to status and our lending policy. The Bank reserves the right to decline any application for an account or credit facility. The Co-operative Bank p.l.c. subscribes to the Standards of Lending Practice which are monitored by the Lending Standards Board.

 

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