First Time Buyers/Keyworkers No Deposit

sarahripper

I forgot to mention that my house is only £95,000 to buy so to loose half its value is very unlikely.

british_2

poppysarah wrote: »

Unkind to it's young???? Eh? Strange comment.

When I was a kid I didn't ever ask my mum for any of her house, I was just happy to have a house to live in and the rest of the time I was out playing.

So why are these schemes a bad thing again? No one has actually said yet. You all seem to be just looking forward to a gloomy future, but I am not.

sharonwai

so co-op scheme and the government thing 35% loan? can I have more info pls?

british_2

SHARON, this is what we are going for.

HomeBuy Direct

What is HomeBuy Direct?

HomeBuy Direct is a new shared equity scheme designed to help up to 18,000 First-Time Buyers into affordable home ownership. The scheme will also help participating house builders by enabling more First-Time Buyers to purchase their newly built properties. The scheme has been allocated £400m of Communities and Local Government funding.

The scheme will be offered on specific new build properties brought forward by developers. Buyers will be offered an equity loan of up to 30 per cent of the purchase price, co-funded by Government and the developer.
Why have you introduced it?

We recognise the difficulties being faced by the house building industry and First-Time Buyers in the current housing market, where the global supply of credit has led to the most severe market conditions since the early 1990s.

Evidence collected by the Regional Development Agencies (eg the recent survey of house builders undertaken by the South East England Development Agency - SEEDA), English Partnerships, The Home Builders Federation and others has demonstrated the impact on house builders - who have experienced a reduction in new reservations - and on First Time Buyers, who have struggled to raise the deposits they need in the tough mortgage market conditions.

HomeBuy Direct will respond to the current market conditions by:

• making more affordable homes available to First-Time Buyers who are currently priced out of the market, due to the higher cost of obtaining a mortgage or the need to provide a larger deposit
• providing a targeted boost to the housing market by stimulating more transactions, and
• helping to maintain the capacity of the house building industry to respond when market conditions improve. This will, in turn, help us to achieve our long-term housing supply targets.

How will it work?

Once launched, HomeBuy Direct will operate as follows:

• As with the other HomeBuy products, the 15 regional HomeBuy Agents (external link) will be the first point of contact for First-Time Buyers who are interested in applying for the scheme.
• General eligibility for HomeBuy Direct will be the same as for the other HomeBuy products (ie households earning £60,000 or less who could not afford to buy a suitable property on the open market without assistance in the area where they live or work).
• Applicants will also be subject to an affordability check, designed to assess the size of equity share that they are able to afford and sustain.
• If applicants qualify for the scheme, they will be invited to choose one of the HomeBuy Direct properties brought forward by the developers.
• The purchaser will receive an equity loan of up to 30 per cent of the purchase price of the chosen property. The equity loan will be co-funded on equal terms by Government and by the developer supplying the property. The purchaser must contribute the remaining equity (a minimum of 70 per cent), through their mortgage (which could be obtained from any lender regulated by the Financial Services Authority) and any deposit.
• There will be no fee charge for the equity loan for the first five years but a fee will be charged from year six onwards.
• Purchasers can redeem the equity loan in installments, purchasing up to 100 per cent equity after their initial purchase by buying additional equity at the market rate.
• Buyers will be able to sell their HomeBuy Direct home on the open market. When they do so, they will repay the equity loan by way of a share of the sale proceeds. This repayment will be shared equally between Government and the developer.
• If the value of the property has increased by the point of sale, the buyer, the developer and Government will all share in this increase. If the value of the property has gone down, Government and the developer will only share the sale proceeds that are left over once the mortgage has been repaid.

Who will it help?

HomeBuy Direct will help:

• First-Time Buyers
  The scheme is targeted at First-Time Buyers who cannot afford to buy a suitable property on the open market without assistance in the area where they live or work. This may be due to the higher cost of borrowing at present, or other factors.
• House builders
  Current market conditions and lack of mortgage liquidity are impacting heavily on the house building industry. There is a long-term public interest in maintaining the capacity of the industry to respond with increased supply when the housing market recovers. The scheme will help participating house builders by enabling First-Time Buyers to purchase their properties (by offering purchasers a better deal than they would otherwise have received).
• The housing market
  First-Time Buyers are one of the key drivers of the housing market. By assisting First-Time Buyers to purchase, HomeBuy Direct will provide a targeted boost to the market. This will encourage developers to build more to meet the extra demand.

Who will be eligible?

General eligibility for the scheme is the same as for our other HomeBuy schemes (ie households earning £60,000 or less who could not afford to buy a suitable property on the open market without assistance).

Although the scheme is targeted at First-Time Buyers, HomeBuy Direct could also help people who have previously owned properties but are now unable to buy without assistance, for example in the case of relationship breakdowns or families who are over-crowded in their existing homes.
When will the scheme be up and running?

The scheme is now in the process of being rolled out. 3,000 HomeBuy Direct properties are available to purchasers now, and further properties will become available very soon.
A complete list of HomeBuy Agents and their contact details is available on the Homes and Communities Agency website (external link).

Catblue

It seems a bit:

"I can't get a mortgage because I am unable to save, so I am taking on a mortgage AND a loan".

I can see how these schemes can help people get on the property ladder, I just can't see how they help with your NEXT move.

Even if there is a big rise in house prices from the time you buy the house until the time you sell the house, your equity will be depleted from having to pay back this loan surely? How could it not be?

So where does the money come from to buy your next house? Remember that if house prices have risen a lot in this period then the house you probably want to buy is a bit bigger than your first house, so you need even MORE money to make the jump to the bigger house. Paying back a loan means that your savings won't be as substantial if you didn't have to pay back a loan, obviously.

This could mean that in 10 years time you could sell the house, pay back the loan and STILL don't have enough for a deposit for the next house.

The other thing that would put me off is that it makes you very locked into staying in the house for at least a few years, doesn't it? More so than with a conventional mortgage. You can have no thought of selling until the loan is paid off and the mortgage is less than what you can sell the house for (minus fees of course).

sharonwai

so complicateD?

grovice

Catblue wrote: »

It seems a bit:

"I can't get a mortgage because I am unable to save, so I am taking on a mortgage AND a loan".

I can see how these schemes can help people get on the property ladder, I just can't see how they help with your NEXT move.

Even if there is a big rise in house prices from the time you buy the house until the time you sell the house, your equity will be depleted from having to pay back this loan surely? How could it not be?

So where does the money come from to buy your next house? Remember that if house prices have risen a lot in this period then the house you probably want to buy is a bit bigger than your first house, so you need even MORE money to make the jump to the bigger house. Paying back a loan means that your savings won't be as substantial if you didn't have to pay back a loan, obviously.

This could mean that in 10 years time you could sell the house, pay back the loan and STILL don't have enough for a deposit for the next house.

The other thing that would put me off is that it makes you very locked into staying in the house for at least a few years, doesn't it? More so than with a conventional mortgage. You can have no thought of selling until the loan is paid off and the mortgage is less than what you can sell the house for (minus fees of course).

Not everybody is looking to buy a home to make money to buy the next home, some of us just want to stop paying for other peoples mortgages and live in our own home, and dont want to buy a house only to have to sell it in 5-10 years, we just want to live in 1 that can last us without having to move when child number 2 or 3 comes along, these schemes allow you to buy a home with 1 extra bedroom than you actually need, they are a godsend to young couples with at least 1 child who are renting and have maybe been saving for a 5-10% deposit but suddenly the banks went tits up and now everything has been pulled out from under us setting us back by years, when your a certain age the likes of 30 year mortgages are unattainable and the clock is ticking

btw, whoever moaned about the tax thing, we ALL pay tax love, time to take some back

Catblue

I was just responding to the couple of comments about getting on the property ladder. It's not a ladder if it only has one rung, is it?

My impression is that these schemes are really for people who want to live in the house for a long time, and not for people who will be trading up or down in a couple of years.

I suspect that not many people will be able to pay the loan back in a very short space of time - if they were able to do that, they'd just wait and save and then get a conventional mortgage.

british_2

I am with grovice. I have picked a LARGE house that is in a nice area, good catchment area, and we are not thinking of moving anytime soon for at least 10 years or maybe never. We are just happy we now have the opportunity to do this and it is all thanks to these schemes. :beer:

suze_g

british wrote: »

I bet. Was that supposed to be a joke? :T:beer:

Well it was supposed to be lighthearted, and pointing out to the other poster that we all make typos, but it was obvious to me what you meant anyway.