"The most generous lenders and range of loans available can vary very significantly depending on the circumstances of a case."
All of the lenders involved with the scheme have similar rules for calculating the expenditure associated with a HTB equity loan and this tends to be between 2% and 3% of the amount. Consequently, this generally does not have a big impact on lender affordability unless the applicant has a high level of existing debt. A small number of lenders restrict the income multiple part of the affordability calculation to 4.5 times income (matching the HTB scheme maximum) but the majority don’t.
We undertook a selection of trial cases to see whether we could identify any other trends and they suggested that the HTB equity loan is usually the limiting affordability factor, rather than the lender affordability. The big surprise from this test, however, was the lenders that fell short on affordability.
In our tests it was major landers including Barclays, Halifax, Santander (not five-year fixed rate) and TSB that fell short. In one particular scenario that we trialled, with fairly straight-forward circumstances, Skipton was the leading lender, offering £45k more than the lender in second place.
To summarise, in most HTB cases there are lenders that are more generous on affordability than the government HTB scheme. But, as with most areas, the most generous lenders and range of loans available can vary very significantly depending on the circumstances of a case.
