Brokers will be able to base their affordability test on a lender’s standard variable rate (SVR) instead of using the Homes England assumed SVR of 4.8 per cent.
The government body said it would result in fewer loan applications being declined, after an offer has been issued.
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.”
Helen Pierson, head of business development, Mortgage Bureau, said: “I’m relieved that the game of pinning the tail on the donkey has finally ended. Accurately forecasting affordability is vital to the Help to Buy qualification process and as such the advice given
“ Homes England’s decision to unlock their calculator will allow brokers to carry out what is acknowledged to be a very important role with renewed confidence.”
Help to Buy equity loan is a government loan that is interest free for five years. Families can borrow up to 20 per cent of the value of the new-build home they want to buy and contribute a deposit of five per cent. After five years, borrowers are charged 1.75 per cent on the original value of the loan.
