Help to Buy

RustyPots · 29 July 2014 at 1:54PM

This is very much in the early stages of planning as we need to pay off our debts before we can move!

OH and I have a house that we estimate to have £15000 equity
We're looking at buying our next home (family home) but we would struggle to purchase as we have such a small deposit.

House would be between £200,000 and £230,000 as this is a comfortable monthly mortgage amount for us and allows wiggle room if (when) rates change

We'd be happy to put upto £13k of into a deposit but not all of the equity we get from house sale as that would pay for sellers fees.

Looking at the Help to Buy scheme would seem to work for us, as it would enable us to move without needing such a huge depost.

Are there any major pitfalls of the Help to Buy scheme that are not obvious? Seems a bit too good to be true :rotfl:

I've also read that we would need to sell out house and be completely mortgage free before we can apply for help to buy, I don't see how that's feasible, the cost of rent and storage for our stuff would be extortionate. Also if we were to buy off plan I understand that it takes a while for everything to be built so we'd be renting/storing for a very long time.

We don't know anyone who has sold a house in the last 20 years, and certainly no one that has bought a house recently or using the Help to Buy scheme. As this is still "dreaming" at the moment I don't want to see a FA and waste their time on something that is realistically 18 months away!

Anyone with info or pearls of wisdom out there?

Mortgage_Mark_2 · 29 July 2014 at 2:01PM

Pitfalls? The rates. They're horrific.

It's worth a chat to a broker as there is at least one deal that I know of from a very, very small name in the market at 95% LTV which is a lot better than you'll get on Help to Buy, and has no early repayment charge either so you're free to find a better deal at any time.

ACG · 29 July 2014 at 2:05PM

RustyPots wrote: »

Are there any major pitfalls of the Help to Buy scheme that are not obvious? Seems a bit too good to be true :rotfl:

I've also read that we would need to sell out house and be completely mortgage free before we can apply for help to buy, I don't see how that's feasible, the cost of rent and storage for our stuff would be extortionate. Also if we were to buy off plan I understand that it takes a while for everything to be built so we'd be renting/storing for a very long time.

All help to buy is (assuming its the 95% mortgage) is a 95% mortgage with the govt backing 20% if you were to default making it less risk to the lender. Its a real scheme and I have done around 3-4 this year.

As for the next comment, you are not allowed to use the scheme and own a second property. However, you can apply and exchange/complete on the new purchase providing the sale of the existing property completes at or before the new property completes. You do not have to be property free at time of application.

kingstreet · 29 July 2014 at 2:54PM

HTB - Equity Loan - is it a newbuild?

HTB - Mortgage Guarantee - is it second hand?

The two schemes are very different.

FlyingCat · 29 July 2014 at 4:57PM

There is the pitfall if you are in Scotland that the scheme is a farce...

Currently having a nightmare with my application.

Hope you are in England and not affected by the useless Scottish Government

RustyPots · 30 July 2014 at 1:37PM

Thanks for the advice guys.

Mortgage Mark - I have seen that the rates are higher, but there is no-way we can take a mortgage of over £170k out, that is our absolute maximum, so without the Government's additional 20% we just can't move. It's not an ideal situation but it's very much a rock and a hard place.

ACG - Thanks for clarifying the situation regarding moving and completing etc, that makes more sense

Kingstreet - We're not fussed either way, we have our eye on a couple of new build developments that are on the way. But certainly if a second hand home comes up we would also take that option. Whilst we do have certain house criteria we'd like to tick off, it's more the area we are focusing on.

Flyingcat - It's England thank goodness, but it does concern me that by the time we get there the money pot may be running empty or close early.

Thrugelmir · 30 July 2014 at 1:53PM

Clear your debts and get saving. Little point in jumping from the frying pan into the fire.

RustyPots · 30 July 2014 at 2:05PM

Thrugelmir wrote: »

Clear your debts and get saving. Little point in jumping from the frying pan into the fire.

That's what we are doing at the moment, we are looking to be debt free in about 12 months and will then be able to save for moving fees and selling fees etc, but we can't save £30k in six months, even if I took a second job we wouldn't be able to. Like I said, rock and a hard place. Maybe it's time to start playing the lottery

Although I'm not sure what you mean about jumping from the frying pan into the fire, I know the rates are a not as good, but quite frankly my current mortgage rate is worse?

Yates78 · 30 July 2014 at 10:29PM

We purchased a new build last November through HTB. The process was smooth for the application but slightly more long winded than a standard mortgage application,

We are with Nationwide and the rate through HTB is 2.34% which is better than our previous mortgage.

We are making overpayments on the mortgage and hope to have enough equity to clear the govt loan within 6-8 years.

Help to Buy

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