Purchase assistance: guidance note on the participatory loan calculator (2013-2021), accessible version

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Homes England

Help with the repurchase of participatory loan

New guidelines for mortgage brokers and advisors

Purchase Assistance Durability Calculator and Mortgage Lender ‘Follow Up’ Rates

Brokers and advisors have a key role to play in delivering a new and improved Buy Help customer journey

Homes England Help to Buy today released a new ‘unlocked’ version of the Help to Buy Equity Loan Sustainability Calculator

This is available for brokers and advisors to use with clients before they apply for a Purchase Assistance Loan Reservation from the Purchase Assistance Agent.

Early Verification gives brokers and advisors the confidence to focus on supporting informed, quality buy-help applications and moving them forward sooner and with more certainty for clients.

He maintains loan choices for clients in accord with brokers and advisers who get the best results for clients.

The publication of the Calculator for Brokers includes more guidance on entering “follow” rates from major lenders. This is intended to provide more assurance that brokers understand the policy context and that “follow-up” rates alone should not guide loan choices.

Using the calculator to verify eligibility before the client applies

Homes England encourages all brokers and advisers to enter their client file details to get an immediate indication of their likely sustainability eligibility for purchase assistance before it is assessed by the agent. help with the purchase.

The new and improved approach allows brokers and advisors to enter the client’s probable “follow-up” or the applicable standard mortgage rate / standard variable rate into the calculator. The rate must be entered if it is higher than the assumed current calculation rate (July 2019) of [4.8%].

Previously, brokers and advisers were barred from doing this, creating unnecessary uncertainty about their clients’ sustainability eligibility.

The changes made today mean that brokers and advisers can use their professional judgment to select the most likely follow-up rate based on their loan recommendations and whether it is greater than [4.8%] get an early indication of sustainability eligibility for Purchase Assistance for that loan choice.

This will provide better results for clients by reducing the risk of sustainability check failure later in the process, for example, after a mortgage offer. This means that brokers and advisers can provide better service to clients with greater certainty of results.

The new unlocked calculator means brokers and advisers can assess client situations and make informed loan recommendations.

A key message for brokers is that all parties are committed to achieving the best results for Buy Help clients. This will be improved by an earlier durability assessment and the new ‘open’ calculator allows this to happen. This new approach means that unique factors, such as a lender’s “follow-up” rate, should not guide clients’ lending choices. The Calculator is Help to Buy’s holistic sustainability assessment.

What Should Brokers and Advisors Do?

Download the calculator and tips.

Brokers and advisors must enter the income and expense requirements of the calculator. Brokers and advisors should also enter the likely “follow-up” rate for their loan recommendation.

If the durability check is successful, brokers and advisers should ensure that the client submits the calculator confirmation with their property purchase assistance information and builder reservation forms to the agent d help with the purchase.

When the initial check of the calculator identifies problems, the broker can review with the client and verify the entries.

The Purchase Assistance Agent will verify the submitted reservation request and the calculator submission. If it meets the requirements of the plan. The Purchase Assistance Agent will issue a Prosecution Authorization (ATP) to the customer.

The ATP is the start of the ownership transfer process and brokers and advisors should ensure that the client’s complete mortgage application is submitted at this point.

If the resulting mortgage offer has the same follow-up rate (or a lower follow-up rate than the assumed current calculation rate (July 2019) of 4.8%) as submitted in the application, the case will proceed to exchange subject to usual assistance. to buy agent approval.

If the resulting mortgage offer has a higher follow-up rate than indicated in the calculator’s rate, the request will be rechecked by the Purchase Assistance Agent. When brokers and advisors know that the mortgage offer will have a higher follow-up rate, they can also request immediate confirmation of eligibility from the Purchase Assistance Agent. Officers will produce it at the close of business on the business day following receipt of a request).

The use of the calculator is only for assistance in purchasing equity loans, lenders will continue to perform their own affordability assessment which is completely separate from this process.

Faq

Where can I get the calculator?

It is available here and should be downloaded each time it is used to ensure that you are always using the latest version.

How to use it ?

It’s a simple Excel document and you enter the customer details in the white cells. There are tips here. The completed calculator gives a pass / fail result and you can print a copy. This should always be submitted to the purchase assistance agent along with the property purchase assistance information and the builder’s reservation forms.

Will this lengthen the process for clients?

No. This will make the process more efficient and secure for customers with less risk of delays later in the process. Early engagement with clients, brokers, and advisors means you can get the best results for them with even greater certainty.

What do you mean by “follow-up” rate?

This is the rate that will apply immediately after the expiration of the original mortgage product. This can be the lender’s standard mortgage rate, for example SVR, or another rate (for example, the discount rate). In all cases, it is the rate immediately following the initial expiration of the mortgage product that must be entered into the calculator. Example: for a stepped-rate product where interest is charged at 2% in year 1 and 3% in year 2, followed by SVR at 5%, the rate to enter would be 5%, the rate taking effect on product expiration.

Why is it in the calculator?

Mortgage brokers and advisers are aware of the separate government sustainability check performed on each purchase assistance seeker by the purchase assistance agent. The purpose of the calculator is to verify long-term sustainability for Purchasing Aid customers. This is to protect the government’s investment and prevent mortgage default from borrowers with purchase assistance.

What is the meaning of [4.8%] follow the rate already in the calculator?

The Homes England calculator ‘follow-up’ rate is currently 4.8%. Homes England does not apply a higher “stressed” rate than this in the calculator.

Is the best outcome for clients to simply avoid recommending lenders with follow-up rates above [4.8%]?

No. It is not in the best interests of clients and should never be the driving force behind loan selection. Using the unlocked calculator means that brokers and advisers can provide better service to clients with greater certainty of results. The new unlocked calculator means brokers and advisers can assess client situations and make informed loan recommendations. This is not a significant factor requiring a change in the policies of senior mortgage lenders or the lending choices of mortgage brokers / advisers to clients.

What if lenders change their tracking rates after the mortgage offer is issued?

No change. ATP approval will be honored (assuming the offer has not changed or expired) by the Purchase Assistance Agent. A re-evaluation will not be necessary when non-material changes to the offer have occurred, i.e. change in postcode, etc.

When does Homes England review the [4.8%] default tracking rate in calculator?

Every six months or after a Bank of England rate change if earlier.

If it looks like the mortgage offer will have a higher rate than the rate I entered into the calculator that was submitted and approved by the Purchase Assistance agent, what should I do?

You can recheck the calculator yourself here or ask the Purchasing Assistance agent to recheck it.

How long will it take?

Officers should be able to do this before the close of business on the next business day following receipt of a request).

Can a customer appeal if he fails to check the calculator?

Only if they have reason that the check was mismanaged by the purchase assistance agent and this caused them to fail. The policy is very clear: Customers who fail the sustainability check cannot buy with Help to Buy. It is not in their best interests to do so.

What will the client see on ATP?

The customer’s ATP includes the following wording.

This ATP means that you can now submit a mortgage application to a lender.

If you go ahead and get a first mortgage offer with a variable follow-up rate (the variable rate applied after the original product rate expires) greater than 4.8%, or the rate we were previously advised , you MUST notify your Purchase Assistance Agent. This is because it is higher than the rate that was used to assess and approve your case.

The Purchasing Assistance Agent will then perform a second check of the durability calculator with the highest rate. If this calculator check fails, the Purchase Assistance Agent has the right to deny the Purchase Assistance funding and the ATP will be withdrawn. The Purchasing Assistance Agent will act at all times in a reasonable manner taking into account the circumstances of each case.

If your first mortgage offer with a variable follow-up rate (the variable rate applied after the initial product rate expires) is greater than 4.8% and you do not notify your Help agent upon purchase, the agent will always verify the mortgage offer. details submitted later in the purchase process when your transport agent requests exchange approval (ETA).

If, at this stage, the variable tracking rate (the variable rate applied after the expiration of the initial product rate) is greater than 4.8%, the purchasing assistance agent will then perform a second control of the product. durability calculator with the highest rate. If this calculator check fails, the Purchase Assistance Agent has the right to deny Purchase Assistance funding and exchange approval contracts will not be granted. The Purchasing Assistance Agent will act at all times in a reasonable manner taking into account the circumstances of each case.

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