Help to Buy / Help 2 Buy experiences/advice?

[nighteyes]

Hey all,

Has anyone as a contractor been through this process before?

What is the application process like?
Where you 100% honest about your earnings?
What were your earnings (roughly)?
Were you advised of any specific criteria that must be met in terms of expendable income?
Any other advice?

Here's my situation:

Contractor for 2 years
£350pd
Mortgage agreement in principle to hand
£20,000 of loan/credit card debt
982 Credit Score
No missed payments for approx 24 months
Lone applicant
Buying 3 bed semi to live with wife for £289,950

Hoping to look at a house tomorrow and if all is well go through the Help 2 buy scheme.

Any advice is very welcome

Thanks
N

[Murder1]

Sorry I may be missing the question but are you essentially looking for a contractor mortgage?
If so look I used these guys and couldn't fault them

[northernladuk]

Where you 100% honest about your earnings?

Not being 100% honest is called fraud. They do checks which will include last 6 months bank accounts and as you are a contractor will include your accounts from your accountant. Anything less than 100% is going to lose you the sale with many other possible ramifications.

20k of loans/cc is going to sting isn't it?

[Bunk]

Sorry I may be missing the question but are you essentially looking for a contractor mortgage?
If so look I used these guys and couldn't fault them

No, he's asking about "Help to Buy", the government scheme to boost house sales. It's something I've been wondering about too. We all know that there are contractor mortgages available based on day rate, but I don't know if Help to Buy would be available to contractors. The people handling the scheme need to do an affordability check to make sure you can afford the mortgage and equity loan, which I'm sure wouldn't be a problem for most of us, but if they don't understand contracting, then I can see it being a problem.

[amcdonald]

Not being 100% honest is called a self certified mortgage.

FTFY

[eek]

20k of loans/cc is going to sting isn't it?

Possibly, possibly not. To the mortgage firm it's probably no different to a car on hp.

Help2buy is for new build only at the moment tho so may not be an option.

[Power Mortgages Ltd]

A lot will depend upon how you are required to prove your income for the HTB scheme.

Obviously as contractors you have the ability to prove your income with lenders like Halifax by annualising your contract rate which gets around the issues of:

a) not having the 2-3 years Ltd Co accounts most lenders need to assess your income in the conventional way
b) having the accounts available but for tax efficiency reasons, the salary and dividends have been kept low and therefore you cannot borrow what you require
c) contracting through an Umbrella firm who utilise a trust/loan payment therefore meaning your actual taxable income is minimal.

However, just because the lender is able to do this, I dont know whether the application for the HTB loan would be assessed in the same way and obviously if you have one of the above issues it is possible that you could qualify for the mortgage but maybe not the HTB loan.

The application part of the HTB loan is not something we get involved in as advisors though so I couldnt tell you if this will be a problem.

I'd say that is the main thing with contractors applying for the HTB scheme though.

[Power Mortgages Ltd]

Possibly, possibly not. To the mortgage firm it's probably no different to a car on hp.

Help2buy is for new build only at the moment tho so may not be an option.

It will make a difference yes. Depends on how the gearing between loans and credit cards is though with lenders often taking a higher repayment on credit cards.

Most lenders will take circa 3-5% of the outstanding credit card balance as a monthly repayment, regardless of what you are actually paying (which if you are paying minimum payments is often quite a bit less). I believe a lot of credit card providers charge 1% - 1.50% as minimum payments so with a balance of £10,000 your minimum required payment would be £100 - £150. Halifax incidentally take 5% of credit card balances so they would deduct £500 in this instance which can significantly impact affordability.

With loans they simply deduct whatever the loan payment is. It is bizarre as you could in theory take a £10,000 loan out and pay off the credit cards and the repayment of the loan could be circa £200 - £300 per month. Your debt level has therefore remained the same size but your borrowing potential increases. In most instances though, having unsecured commitments like loans, credit/store cards, hire purchase, PCP lease agreements and the like will affect your maximum borrowing. Same with number of children and non earning spouses/partners added to the mortgage, that will affect maximum borrowing too.

[Bunk]

A lot will depend upon how you are required to prove your income for the HTB scheme.

Obviously as contractors you have the ability to prove your income with lenders like Halifax by annualising your contract rate which gets around the issues of:

a) not having the 2-3 years Ltd Co accounts most lenders need to assess your income in the conventional way
b) having the accounts available but for tax efficiency reasons, the salary and dividends have been kept low and therefore you cannot borrow what you require
c) contracting through an Umbrella firm who utilise a trust/loan payment therefore meaning your actual taxable income is minimal.

However, just because the lender is able to do this, I dont know whether the application for the HTB loan would be assessed in the same way and obviously if you have one of the above issues it is possible that you could qualify for the mortgage but maybe not the HTB loan.

The application part of the HTB loan is not something we get involved in as advisors though so I couldnt tell you if this will be a problem.

I'd say that is the main thing with contractors applying for the HTB scheme though.

Yep, that's the bit I'm not sure about at the moment. I might be looking in the next couple of months though so will report back if I find out.

[ExPermie]

You're probably better off asking over at Money Saving Expert forums under the Mortgage sub forum, plenty of brokers on there with advice for the employed and self-employed.

Yeah, H2B doesn't apply to 2nd hand gaffs until after Jan 2014 I believe...best to check over at MSE.

Hey all,

Has anyone as a contractor been through this process before?

What is the application process like?
Where you 100% honest about your earnings?
What were your earnings (roughly)?
Were you advised of any specific criteria that must be met in terms of expendable income?
Any other advice?

Here's my situation:

Contractor for 2 years
£350pd
Mortgage agreement in principle to hand
£20,000 of loan/credit card debt
982 Credit Score
No missed payments for approx 24 months
Lone applicant
Buying 3 bed semi to live with wife for £289,950

Hoping to look at a house tomorrow and if all is well go through the Help 2 buy scheme.

Any advice is very welcome

Thanks
N