Own Home Scheme Pros and Cons

themanbearpig

ladybird3 wrote: »

Not everyone applying for this scheme is on a low wage!
I earn above the average income in a very secure job following 3 years at university to get there.
Actually, saving up for a 5% deposit is extremley difficult even if you do get a good wage because the rental market is so inflated and that is not something which is going to change in the immediate future. Perhaps you haven't noticed that most lenders are now asking for at least a 20-25% deposit-pretty hard to save for I would say!

Given the current economic climate as you put it I would say that any fool can see that sticking all your money into savings is not in fact the sensible thing to do! Interest rates are at absolute rock bottom therfeore why put your cash into an account where it will sit and do nothing when there is an opportunity for it to go into bricks and mortar where it's likely in the future there will be a return on?

I think you're absolutely incorrect to say that schemes like this have caused the housing prices increase, aside from the fact that they have only been running for a couple of years I think it's clear to everyone who keeps an eye on any form of financial news that there is a lot more to it than that.

There are many areas in the country where even if the further drop in the market still wouldnt allow people to buy somewhere to live. Perhaps you think that people should move away from the more expensive areas and everyone who cant afford to buy should all move up north to where property is much cheaper? But then I wonder what a neighbourhood do without nurses, policemen, firemen, teachers, etc etc etc. . . . .
These schemes absolutely offer financial prudence. They give working people on average to above average incomes the chance to put there money into a long term investment. For me personally my mortgage payments on this scheme are going to be so low (in fact several hundred pounds less than the rent im paying now) I will be able to save up my excess income to buy into the equity loan-how is that not financially prudent?? I'm sure many other people are planning on doing the same and for those who have definate career progression and hence salary progression it is fantastic.
Perhaps you would prefer that the government spends taxpayers money on increasing social housing to house people who cannot or will not make any sort of financial contribution to society whatsoever? Oh no wait, they're doing that anyway and both the schemes to help first time buyers and keyworkers are being scrapped. You have you wish geoffky! I'm sure you'll be happy to know that your tax is now going towards paying for over a billion pounds of social housing

As for the housing market bottoming out in 3-5 years.. . . . . . . hmmmm think it might be a bit sooner! Anyone agree?

Schemes like these have promoted the culture of property ownership at any cost. This culture created and perpetuated by the mainstream media encouraged economically unaware people to buy into the overvalued market (and they still are at it). Instead of raising interest rates when the market was clearly overheating and becoming unaffordable, Mr no-boom-and-bust in his infinite wisdom decided create schemes like these instead of dealing with the problem.

Anyway back to the present... Lenders are only asking for 25% LTV because the market is still overinflated. When the market deflates, and the banks have a little more confidence in the stability of the economy and can afford to lend again, they will fall back down to 5-10%. The same thing happened in the 1990s crash. They current LTV requirements are not long term, so if it takes you 3 years to save 5%, there is a high chance lending will be more relaxed by then, and there is a very high chance that property prices will be significantly lower, which means that over the term of the mortgage, you will be paying a lot less, even if mortgage rates are higher.

Property has shown to be a good investment in the long term - ie, 15+ years. But in the short to medium term, during the time you will most likely be living in your house, there is a good chance the value will fall if you buy now, leaving you in negative equity.
The current poor return on your savings isn't really important either, because again, the interest rates aren't going to be this low for a long period of time, but this also means that money you are saving to payback your government loan will soon be going into increased interest payments.

Buying now is a lose-lose situation, unless you have a huge deposit and can get a good 10+ year fixed rate.

Playboy999

Just wanted to ask everyones progress so far with your Ownhome purchases?

ladybird3

Got all the paperwork through from the solicitors yesterday to sign-contracts/deeds/boundary plans/agreement of sale etc etc etc, spent the entire evening going through it with a fine tooth comb but it's now all been signed and put in the post this morning.
Co-op rang me today to say the final offer will be sent out tommorow or monday at the very latest so hopefully it wont be too long before I have a rough idea of exchange and completion dates :j

Where is everyone else at?

Superfran how are you settling in?!

Cloister

Solicitor rang yesterday to say she is trying to arrange exchange and completion, she hopes she can exchange today or tomorrow with a view to completing on the 12th August.

But the dates aren't set in stone yet.

can't be quick enough for me!

tek-monkey

Surely the financially !!!!!! are those who purchased at the height of the boom?

Guess I'll just carry on renting, means I can leave whenever I want but also means I pay more than I'd like to live. Ho hum.

superfran_uk

tek-monkey wrote: »

Surely the financially !!!!!! are those who purchased at the height of the boom?

I would say that is probably closer to the truth! If I had bought 2 years ago with a 100% mortgage, I would probably now be in negative equity... but somehow buying now, limiting my potential equity and therefore the risk to 70% of the property price, and being able to afford a larger more saleable house in a good area close to schools... that's !!!!!!?

I'm fine thanks Ladybird, can't believe it's been 2 weeks since we got the keys! Have started to settle into a routine and it's been great, neighbours are nice and area is lovely and quiet! Only problem now is getting back our old deposit from our shifty ex-landlord and also paying our first mortgage installement - which is over double what it should normally be at £1700! :eek: That will be a fun month!

Cloister

Superfran, how come your first payment is nearly double? I did come across your thread about your deposit, thats a real pain in the !!!!.

We have ours held in a secure deposit thing, no idea if it will help when time comes to move, but I'll be glad to have double glazing! and a shower! we only have a bath at the moment.

superfran_uk

They should have explained this to you. It depends when you complete and your payment day but your first payment will always be more. In our case we completed on the 1st and our payment date is the 1st, they need some time to set up a d/d after completion, so we have our July and August payments both together, plus the transfer fee which we had added on.

Morphosis

How long does it take to get the paperwork for the loan once you have your mortgage offer and survey completed?

Playboy999

ladybird3 wrote: »

Got all the paperwork through from the solicitors yesterday to sign-contracts/deeds/boundary plans/agreement of sale etc etc etc, spent the entire evening going through it with a fine tooth comb but it's now all been signed and put in the post this morning.
Co-op rang me today to say the final offer will be sent out tommorow or monday at the very latest so hopefully it wont be too long before I have a rough idea of exchange and completion dates :j

Where is everyone else at?

Superfran how are you settling in?!

My partner is waiting for the final mortgage offer as well. I hope they don't take too long sending it out - i hate waiting ha! He also has to send his id off to the Solicitors so they can begin to do their bit.

Ladybird - i take it Optima have carried out all the searches etc for you?