Help to Buy Phase 2 - Rip Off? Plus Advice

SpaceCowboy83 · 23 October 2013 at 7:27PM

Hi All,

Can anyone correct me or even confirm my thoughts please?

The idea of the 'Help to Buy Scheme Phase 2' is to help low deposit buyers get on the property market...Right?

This is done by the Government protecting the mortgage provider if all goes belly up, thus giving the provider the ability to offer more mortgages than before.

So does this mean the scheme should be called 'Help to Lend Scheme'?

I visited the bank today to discuss the scheme only to find out that the % rate offered is higher on this scheme because the risk of lending to someone with a low deposit is higher risk. Well if the provider charges more then the mortgage surely becomes high risk as the repayments are higher. Am I failing to see the help to buy i am receiving.

All I can see is the provider making more money whilst being protected against the people they are putting under pressure not to mention the impact if rates rise.

Why did the government not open phase 1 up to any property not just new builds? This makes sense as I would be able to secure a 75% mortgage (i.e. affordable repayments). This would allow me 5 years to build a pot to payoff some or all of the government equity loan. Please don't suggest to go ahead with a new build scheme to benefit as this does not suit my family needs for various reasons.

Going forward... I have access to a 10% deposit of approximately £15,000 (this would buy us a house to suit our needs) from a family member without the need to repay. Only problem is we have a low credit score (585) & my fear is we may be turned down or if given the go ahead the repayments maybe a little too high. What should I be looking for mortgage wise?

Any advice?

Thanks SC83.

Turnbull2000 · 23 October 2013 at 7:35PM

The biggest beneficiaries of Help to Buy will be the banks, house builders and older home-owners looking to cash in.

Like most other schemes purported to 'assist' first-time buyers, the policy is purely politically driven, with targeted winners being either those who vote (over 55's) or those with influence (property developers, banks).

That said, if you're one of the early Help to Buy adopters, and purchase a good sized property that you won't need to upsize from soon, you should at least enjoy price gains of 10-20% over the next few years (up to 20-30% in South East).

Missme · 23 October 2013 at 7:39PM

Without the Help To Buy scheme would you be in aposition to buy now?

There is no rip-off. Government shemes may allow people to do something now as opposed to in months or years time but there is nothing to say the terms should be as favourable as for those who have a bigger deposit.

Enablement isn't the same as levelling the playing field and your choice is limited to operating within the terms of the scheme or not.

MaxTheCat · 24 October 2013 at 5:17AM

SpaceCowboy83 wrote: »

Hi All,

Can anyone correct me or even confirm my thoughts please?

The idea of the 'Help to Buy Scheme Phase 2' is to help low deposit buyers get on the property market...Right?

This is done by the Government protecting the mortgage provider if all goes belly up, thus giving the provider the ability to offer more mortgages than before.

So does this mean the scheme should be called 'Help to Lend Scheme'?

I visited the bank today to discuss the scheme only to find out that the % rate offered is higher on this scheme because the risk of lending to someone with a low deposit is higher risk. Well if the provider charges more then the mortgage surely becomes high risk as the repayments are higher. Am I failing to see the help to buy i am receiving.

All I can see is the provider making more money whilst being protected against the people they are putting under pressure not to mention the impact if rates rise.

Why did the government not open phase 1 up to any property not just new builds? This makes sense as I would be able to secure a 75% mortgage (i.e. affordable repayments). This would allow me 5 years to build a pot to payoff some or all of the government equity loan. Please don't suggest to go ahead with a new build scheme to benefit as this does not suit my family needs for various reasons.

Going forward... I have access to a 10% deposit of approximately £15,000 (this would buy us a house to suit our needs) from a family member without the need to repay. Only problem is we have a low credit score (585) & my fear is we may be turned down or if given the go ahead the repayments maybe a little too high. What should I be looking for mortgage wise?

Any advice?

Thanks SC83.

This scheme is simply a way of making the housing market move by sucking forward demand from people who intended to buy but hadn't yet managed to save the deposit. Surprisingly it is happening in the run up to an election and is due to finish just after an election.

Mrs_Z · 24 October 2013 at 8:03AM

Yes, a nice little earner for the Government - think of all the ££££££'s they are receiving from the stamp duty money.....

johannalf88 · 24 October 2013 at 8:14AM

Mrs_Z wrote: »

Yes, a nice little earner for the Government - think of all the ££££££'s they are receiving from the stamp duty money.....

I don't get what's wrong with that! I would rather pay a tax on something I own, as supposed to having a higher tax taken from my wages with no immediate seen benefit to myself.

And these are the people who would be looking to buy in a few years anyway, so actually the government is loosing SDLT as they get today's cost, not the risen costs in a few years! (Speaking from a London prediction).

kingstreet · 24 October 2013 at 8:26AM

If you could get a 95% mortgage a few weeks ago, the only difference today is there are a couple more lenders offering them. The purpose of HTB - MG is to;-

- increase the availability of higher LTV mortgages

by the Government guaranteeing from 80%, upto 95%, using an indemnity fund paid for by the lender (and the borrower) by a levy on the mortgage rate.

It was not designed to offer lower rates and these are broadly in line with other 95% products freely available, nor was it intended to provide mortgages to those with credit issues or a lack of affordability.

IMHO this will have limited direct impact on the housing market, with hotspots growing where they would have grown anyway, even without the scheme.

Anecdotal evidence from brokers suggests Halifax is offering 95% to very few borrowers, with the DIP defaulting to 90% or even 85% in many cases. It will take a while before people appreciate this is not a giveaway.

go_cat · 24 October 2013 at 8:28AM

If I were you I would be spending the time I had giving myself the best credit record I could... Or you will be offered even higher interest rates if any at all

Tancred · 24 October 2013 at 9:16AM

SpaceCowboy83 wrote: »

Hi All,

Can anyone correct me or even confirm my thoughts please?

The idea of the 'Help to Buy Scheme Phase 2' is to help low deposit buyers get on the property market...Right?

This is done by the Government protecting the mortgage provider if all goes belly up, thus giving the provider the ability to offer more mortgages than before.

So does this mean the scheme should be called 'Help to Lend Scheme'?

I visited the bank today to discuss the scheme only to find out that the % rate offered is higher on this scheme because the risk of lending to someone with a low deposit is higher risk. Well if the provider charges more then the mortgage surely becomes high risk as the repayments are higher. Am I failing to see the help to buy i am receiving.

All I can see is the provider making more money whilst being protected against the people they are putting under pressure not to mention the impact if rates rise.

Why did the government not open phase 1 up to any property not just new builds? This makes sense as I would be able to secure a 75% mortgage (i.e. affordable repayments). This would allow me 5 years to build a pot to payoff some or all of the government equity loan. Please don't suggest to go ahead with a new build scheme to benefit as this does not suit my family needs for various reasons.

Going forward... I have access to a 10% deposit of approximately £15,000 (this would buy us a house to suit our needs) from a family member without the need to repay. Only problem is we have a low credit score (585) & my fear is we may be turned down or if given the go ahead the repayments maybe a little too high. What should I be looking for mortgage wise?

Any advice?

Thanks SC83.

Of course it's a rip off! Do you honestly think that any government initiative is designed to help people? Dream on! :rotfl:

Britain is ruled by the banks and financial services organizations. Governments are just puppets.

brit1234 · 24 October 2013 at 9:23AM

Missme wrote: »

There is no rip-off.

Tell that to all the people fooled into this and the scheme ends leaving them in negative equity.

The reason banks demanded high deposits was as property was so overvalued and to protect them when the falls come. This is going to end in tears.

SpaceCowboy83 · 24 October 2013 at 8:16PM

Hi All,

Thanks for the responses.

Seems this slightly splits opinion, but the majority seem to agree the government are only helping themselves not buyers.

Doing bits of research seems if anyone as a 10% deposit these schemes are 100% worth avoiding.

Thanks SC83

Help to Buy Phase 2 - Rip Off? Plus Advice

Comments

Confirm your email address to Create Threads and Reply

🚀 Getting Started

Categories

Is this how you want to be seen?

Get our FREE Weekly email full of deals & guides - and it’s spam-free