My Choice Homebuy

haziec

Our daughter and son in law have been accepted on this scheme and are going for an interview to sort out the financial side of it. They can start househunting but not put in an offer until after the interview in a couple of weeks.
They have asked us to go with them as they are not financially "savvy".
On the face of it, this scheme looks like the best/only way they will be able to buy their own home. Their low salary multiples would near reach the amount they have been provisionally quoted.

But, wondered if anyone knew of any pitfalls to look out for/hidden charges etc. Or, has anyone bought a property on the scheme and can share their experience of it?

Many thanks, your help will be appreciated.

ad9898_3

They are legal scams to keep property artificially inflated, avoid like the plague.

haziec

ad9898 wrote: »

They are legal scams to keep property artificially inflated, avoid like the plague.

thanks, Can you explain why you would avoid them?? The property around here has fallen and there are some very good buys around.

Its a cheaper way for them to buy a property of their choice, so without this I don't think they have many other options. Would certainly cost more if they bought with an ordinary mortgage and the multiples of their salary would never buy anything around here.

ad9898_3

Of course it depends on you're area to a certain extent, however regardless of whether property has fallen in any particular place, it's highly likely to fall much further.

1. We are at the beginning of the worst recession since 1929.
2. Public and personal debt is at record levels.
3. Repo's this year are likely to exceed the early '90's despite Interest Rates being 15% then and 1% now.
4. The Halifax figures last month are almost certainly 'noise' and the perfect bull trap.
5. House prices never trend upwards in a recession.

There are lots of other factors, but I will leave it there for now, what all this means is the money, whether it be 25% or 50% that is part of the Homebuy scheme will remain constant throughtout the period, it will have to be paid back in the future regardless of whether house prices have continued to fall. The best bet is to wait another 18 months or so, the bottom of the market may then be in sight.

Don't try to catch a falling knife. Patience is required.

haziec

Thanks, I understand what you are saying, but the 50% advanced by the government DROPS if the price of the house drops, its not a set amount like a mortgage, but as they intend to get a property for long term use, as we are just outside the M25 with easy commuting I can't see a massive drop as there is in some areas over a long period.
Also the part which is the mortgage will be obtained at a competitive rate as its only for the other 40% (they have a deposit)

They need some advice if there is any hidden charges on this scheme like extra insurance etc and would appreciate anyone who has had first hand experience of buying like this.

The other option is to rent...massive rents around here and not much security or spend longer with mum and dad, not the best way to start out together really.

ad9898_3

HAZIEC wrote: »

They need some advice if there is any hidden charges on this scheme like extra insurance etc and would appreciate anyone who has had first hand experience of buying like this.

I think the best advice I could give is sit down, write down all your hopes and fears regarding this type of thing, then go and see a IFA, it will be money well spent. As for my opinion, all that I do is take in all the information from all the different kinds of media, then make a judgement.

The money no longer exists to prop up 2007 house prices (or current prices for that matter), and in inflation adjusted terms, never will again, the reason is simple, it has caused the collapse and near collapse of major institutions.

If property was worth what it currently is, there would be no need for Homebuy, Shared Ownership, Shared Equity schemes etc.... the simple reason for this is the banks would lend you 100% of the value, the fact that they won't, and what's worse is for the best deals 40% deposit is required, says it all. The banks do not believe property is worth it's current value, so why should any of us.

Hope my comments have helped, even though I'm a bit bearish in my outlook, better to be safe than sorry.

haziec

Thanks, I do know what you mean. Fortunately they have already seen an independent financial advisor, who could only get them an 80% mortgage at 3x salary and with property around here 175k + for a flat its out of their reach. The mortage quoted was only 2 year fixed rate and not a good one at that.
Like you I am seriously concerned about the financial future for all of us with this goverment, particularly young people, who are not being given a start. But, they do have to start somewhere. Our daughter works in financial referencing for lettings and has had enough of landlords so she does not want to go down that path! They do need their first home on their own though, so they think its worth taking a chance. Only wish we could help them more.

Its a cheaper and better choice route than shared ownership which I wouldnt touch with a bargepole, but for some it might have worked out.

Now, all we need is some savvy bargaining with the vendors and estate agents, as the whole lot will be guaranteed hopefully this will be a good lever!! If we have our way they will get a MASSIVE reduction in the asking price, as being first timers and the funds are ready hopefully will be a key factor.

thanks again.

jonbjuk

I've been accepted on the MyChoiceHomebuy scheme and will have my finance meeting in the next couple of weeks. As I understand it the funding is not available until April but i'm not sure if this is just an Eastern issue or national.

I'm in no rush to buy due to the uncertainty of the market at the moment. I only want a 2 bed place and if the prices continue to drop further as predicted then a year down the line I might be able to afford to buy outright anyway.

My plan is to go and make some very low offers on some properties and walk away. If they accept then I might take the plunge, if not then i'll just sit tight.

As I understand the scheme, the only extra charges are the interest on the Government loan starting at 1.75% and any services charges if its a flat. I had an informal meeting with a financial adviser when finding out about the scheme and he said that there were no hidden charges and gives you much more freedom than shared ownership as you can buy and sell on the open market.

haziec

Thank you jonbuk.
I have found a very long thread on here about it and it seems that the money runs out fast!
I think our daughter and SIL will make low offers as well!
I need to find out if they are restricted on how many bedrooms they can have as a poster on the other thread said only two! Not really "mychoice" then is it??

Chris2685

I was going through this scheme a few months ago. It causes a lot of stress and is not really worth it to be honest... I am VERY glad that I pulled out of it, not just because the house I was going to buy has already lost £30,000 on it's asking price, but also because I would have been saddled with a huge debt and only a portion of a house in reality.

It looks like a great thing to begin with, but once you actually start going down the road, you find it is not all sunshine and lollipops.

jonbjuk

You can only get 1 more bed than you need. I'm going to be buying on my own so can only get a 2 bed place. I assume the same would be the case for your daughter and her other half unless they have a child.

Apparently, the money ran out after 3 weeks last year but then more money was made available. I assume that if the Government want to help revive the housing market then more money will be made available but who knows?