Mortgage hopes...is this realistic?

[PleaseGetOffTheTableDarling]

Hi, hoping someone wise can help me manage my expectations!

DH and I are currently saving towards a deposit - we would both be first time buyers. We are aiming to be in a position to buy at this time next year, at which point we will have 12.5k for a deposit, plus 5k for costs /fees etc.

We would be aiming to get a Help To Buy mortgage (5% deposit, government provide 20% of loan, bank provide the rest) so in theory, could achieve a budget of 250k. In our area this would be a good budget for a 3 bed in an ok area.

BUT I'm not sure whether we would get this, and this is why I'm posting! Here's why:
Our household income is 45k. DH is self employed and I am a SAHM.
We have two DC, age 2 and 4, so DH has three dependents.

Am I right in thinking we would therefore get a max of roughly 160k loan (3.5x income)?. I know this is the usual figure but not sure how it applies to Help To Buy mortgages!

Other (possibly) relevant info:
We both have great credit ratings
DH is an EU national but has been in UK for 12 years.

If anyone could clarify for me I'd really appreciate it!

Most banks will have calculators on their site which will give you an idea of how much they would lend based on your income. You'll find it varies between lenders. (not suggesting that these are the banks that you would want to apply to, but they are useful for research

Thanks user, I'll check those out.

I could be really wrong here but I though I read help to buy ceased December 2016?

www.telegraph.co.uk/news/2016/09/29/philip-hammond-announces-end-of-george-osbornes-flagship-help-to/

Lilmisskittykat There are 2 versions of help to buy, one has ended but the one that is just for new builds is still available - I assumed the O/P was referring to that one.

From the article you linked to:
"Other help-to-buy schemes will continue until 2020, including the five-year, interest-free equity loans for new-build homes."

Talk to a mortgage broker. If DH is self employed he will need three years worth of self employed accounts and it is likely that any lender will want an affordability calculator, so calculating all income and outgoings.

Normally with self employed people they will look at the last three years tax returns and use an average from them, rather than using the figures from the latest one, so the lending figures may change, something to bear in mind.

I don't know much about help to buy schemes, but good luck with it all. Better to get into the right position now, so that it will all be smoother when you have the deposit together.

I missed that your DH was self employed. Definitely see a broker, not all lenders are sympathetic to less than straightforward mortgage appolications (I mean both of you employed PAYE) whereas a broker will know exactly which lenders to approach.

FWIW I have found Nationwide and Santander to be good with self employed applications. From what I hear HSBC not so good.

Thanks everyone, loads of info to think about here...I appreciate you all taking the time to respond.

S'pose I could sell a kidney. Or one of the DC...

Note if dh is a limited company contractor then find a specialist mortgage broker. Our one is fantastic and really sorted us out with no hassle. Alas twice we've had two properties fall through.

I absolutely agree with using a broker, we had a HTB mortgage on our first house and the builder insisted that we use one (we used one they suggested) as we'd met him when we'd gone to their launch weekend.

Anyway not to put a dampner on it but we found that the lending criteria were stricter for HTB mortgages than since moving to a non-help to buy house a couple of months ago in terms of salary multiples. A good broker will very quickly be able to tell you. We had a Nationwide mortgage and they offered the best rates.

If you can do it though I would definitely go for it, both dh and I were divorced and this enabled us to buy a family size house together and as value increased we've now moved again but been able not needed to use another HTB scheme, it really worked for us.

Also if you're buying a new house you might find that the builder will have all kinds of offers (ours paid our stamp duty) especially if you get in on the development early.

If you want to know anything more about the HTB process then let me know, some of it is a bit convoluted (especially selling!)

Wrt HSBC and limited companies, they had no issues when I saw them, just a couple off years ago

Nationwide and Santander no issues with Ltd companies either

As it hasnt been mentioned yet, the banks take into account any credit cards and loans so make sure to pay them off as much as possible. A credit card you spend on and pay off in full each month is fine though.

Thanks user that's really good to know about it still being available on new builds.

HSBC had no issues with self employed mortgage but I would consider HTB very very carefully.

From telegraph....

Using Help to Buy means a smaller mortgage and lower monthly repayments than someone with a 5pc deposit would normally be able to access.

They would also have to pay £6,452 in interest on the loan after the five-year interest-free period, and crucially, would have far less equity in the house after ten years - but this is partly balanced by a lower mortgage rate, meaning faster repayments.

The SIZE OF THE LOAN INCREASES significantly if house prices go up, as when the property is sold, the Government will take back 20pc of the equity, unless the loan is paid back.