FTB is Ownhome Scheme the right move?

d0nmarc0 · 20 August 2008 at 10:18AM

Hi there,

My partner and I are first time buyers in Newcastle upon Tyne, we have recently been accepted on the ‘Ownhome Scheme’ https://www.ownhome.co.uk working in partnership with the co-operative bank and the government.

We can afford a mortgage of £120,000 using our 20% deposit we have saved up without using the scheme.

With the scheme we can take a 40% interest free loan/equity share for 5 years on the value of a property up to £158,000.

Would we be financially better off if we used the scheme to buy a more expensive property in a better location, and keep our deposit locked in our ISA, even though we would only own 60% of the equity of the property?

Any advice much appreciated

Jumping_Bean · 20 August 2008 at 10:45AM

My advice would be not to buy at the moment. House prices are falling rapidly. If you wait a couple of years you'll probably be able to get the £158,000 property for less than £120,000 and you'll own 100% of it and won't have the risk of negative equity. If the scheme still exists when prices have dropped then by all means use it then.

currynchips · 20 August 2008 at 10:50AM

You have enough for a decent place using the money you have. Not sure of where you live right now but there are good houses in Cramlington, Dudley, Fawdon, Kenton, Fenham and South Gosforth for your £120k budget.
My own experience of ownhome/mychoice homebuy govt schemes is they are simply not worth it. They withdraw funds on a whim, don't keep in touch, don't even care about your own situation. Don't use them.

As for the house prices, unfortunately no one really knows. I'd love prices to keep falling for 2 years then jump in, but I'll feel bloody silly if they start rising again shortly.

wymondham · 20 August 2008 at 11:03AM

Wait and save .... things are dropping and you'll be top of the queue with a good deposit when things pick up!!

d0nmarc0 · 20 August 2008 at 11:51AM

I do see the advantages of holding off but we are pretty desperate to move out. Is it definitely not worth going for the Ownhome scheme even if you know you can pay off the loan in 5 years?

Is it really a bad time to buy if we can comfortably afford to and granted the house prices are dropping but if we stay in the property for 5 years will we not potentially end up in positive equity as the market is predicted to recover (extremely slowly)?

CHARDONNAY_3 · 20 August 2008 at 6:27PM

Personally I've had nothing but hassle with these schemes (ownhome & mychoice homebuy) so my advice would be to avoid them&keep your sanity.

These schemes keep prices high, I think most people should avoid them & let the crash take full force then it will be better for all us FTB's.

fatpig_2 · 20 August 2008 at 6:37PM

artificial scheme to keep inflated house prices high. one to avoid me thinks

ips78 · 20 August 2008 at 7:08PM

Hi,

I am currently buying a property through this scheme. My experience so far has been positive, both with ownhome and co-op bank. Mortgage was approved today and the co-op told me there was still plenty of funds available from ownhome, so i should get confirmation on that shortly (i hope !).

As for whether it is better to use your deposit or the scheme, that's a difficult one. Personally, if i had your deposit i would use that and own the house 100% from the outset.

Anyway, don't be put off, if you need a house and its affordable, go for it !

ad44downey · 20 August 2008 at 7:33PM

it'll be even more affordable in 1 or 2 years' time

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FTB is Ownhome Scheme the right move?

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