Brokers and financial advisers will be better able to
check the likely success of their clients Help to Buy: Equity Loan
applications, following an update to the Homes England
sustainability calculator.
The updated sustainability calculator allows brokers and
financial advisers to use the mortgage interest rates they expect
specific lenders to charge, after any discounted or fixed period
comes to an end. This replaces affordability tests based on an
assumed Standard Variable Rate of 4.8%. It will show customers
what they can afford to borrow from the outset, resulting in
fewer loan applications being declined after the customer has
their mortgage offer.
Help to Buy Director Will German said:
“Brokers and advisers play a vital role in helping customers to
use and understand Help to Buy. We’ve listened to their feedback
and have updated the Help to Buy: Equity Loan calculator to help
them do more realistic affordability checks for their clients
before they formally apply for their equity loan.
“We have unlocked the calculator so they can see, select and
enter the most likely follow- on rate from their recommended
lender. They can see immediately if it is higher than the current
Standard Variable Rate of 4.8% that we apply and can assess
affordability more effectively.”
If the individual lender’s rate is higher, advisers can factor
this in from the outset of their client’s loan application. They
can assess the risk of the payment rate potentially causing a
problem in the future at the earliest opportunity. Homes England
only allows customers to use Help to Buy if they are able to
afford the loan payments. Customers who fail the sustainability
check cannot take out a Help to Buy: Equity Loan , so the
accuracy of the information that goes into the calculator is
crucial.
Will German said: “Our customer feedback highlights how important
brokers and financial advisers are to customers. This calculator
update will allow them to improve the service they offer their
customers.
“It also gives potential Help to Buy: Equity Loan customers more
certainty about the financial advice they receive, what they can
afford and the likely outcome of their loan application.”
Jane Benjamin, Director of Mortgages PMS and Sesame, said: “It’s
great news that the constraints that brokers may have felt with
having the second affordability check in place have now been
lifted.
“Advisers can now more confidently consider a wider range of
lenders at the very beginning of the time-pressured application
journey. It’s fantastic to be working with Homes England to
implement positive change supporting brokers and customers.”
The sustainability calculator and guidance for its use
are here
Notes to editor
Help to Buy: Equity Loan – is a government loan, that is interest
free for five-years, towards a deposit on a new-build home with a
purchase price of up to £600,000. Borrowers pay 5% deposit, the
government lends up to 20% (up to 40% in London) and a mortgage
of up to 75% (55% in London) makes up the rest.
Homes England is the government’s housing accelerator. We have
the appetite, influence, expertise and resources to drive
positive market change. By releasing more land to developers who
want to make a difference, we’re making possible the new homes
England needs, helping to improve neighbourhoods and grow
communities.
For further information, please contact the Help to Buy
communications team via Media_helptobuy@homesengland.gov.uk
