First Time Buyers/Keyworkers No Deposit

Wickedkitten

neas wrote: »

who the hell is funding this black hole of money lol? its like the government is taking on negative equity.... how .... crazy .

I still believe putting off for 5 years an increase in mortgage is not a good idea.

They are not actually playing the long game, but gambling that most people that take these out won't end up paying the loan back quickly so they will end up being owed a hell of a lot more than they loaned in the first place if prices shoot back up again.

You can play these schemes really canny in a falling market by taking one out and then saving like mad so when the market has does actually correct itself, you know the bottom has been hit, and your house is worth less than you paid, you pay off the equity portion.

How do these things work if you remortgage actually if someone on these schemes can answer? Are you tied into the co-op for the length of the mortgage or will another lender be willing to help you if co-op already have a second charge on the property?

scott567

Seems like a good idea, definitely for the short term though, worth looking into.

Idiophreak

neas wrote: »

I can see the point of getting a house, but borrowing money against future potential earnings (to pay off the increase in 'mortgage') is silly to me. What if you can't pay both loan and mortgage later (as you can't afford to pay it now...)

Again...who said anything about not being able to afford it?

You've presented a lovely worst case - well done - but there can be much better outcomes than that.

If you assume you sell at the same price as you buy for (you've got 5-10 years for the market to recover...it's a punt, but not overly so), what you'll actually end up with is the total of anything you've saved in that period, added to any equity you've built in the mortgage. That might be a lot, it might be practically nothing...but it's more or less guaranteed, at present, to be more than you'd have if you remain renting.

Obviously, there's a risk of negative equity and so on - but when isn't that the case when buying a house?

A lot of you seem to have been transfixed on the high amount you have to save to repay this loan...but it really isn't that bad...All you need to save is enough to re-mortgage, basically - not the whole loan. So if value is 200, loan is 25% - really, all you need to do is save 10% for the re-mortgage - £20k. Which is what you'd have to do to buy your first house scheme or no scheme.

If you think of the schemes as a way to help you get a foot on the ladder, rather than being on the ladder itself, you start to see the value in the thing...

Idiophreak

Wickedkitten wrote: »

How do these things work if you remortgage actually if someone on these schemes can answer? Are you tied into the co-op for the length of the mortgage or will another lender be willing to help you if co-op already have a second charge on the property?

As I've said before, I'm not with co-op, but as for my scheme:

You're not tied to a given lender at all - although only limited banks (typically nationwide and halifax) are prepared to deal with shared equity deals.

Obviously, the idea is that when you remortgage, you'll provide a deposit yourself to buy out the loan - so it doesn't matter at all what lender you're with, as long as you can get the right LTV. Solicitors costs may be higher to deal with repaying the loan - and you'll need to pay for a couple of valuations, but that's it.

Wickedkitten

Idiophreak wrote: »

As I've said before, I'm not with co-op, but as for my scheme:

You're not tied to a given lender at all - although only limited banks (typically nationwide and halifax) are prepared to deal with shared equity deals.

Obviously, the idea is that when you remortgage, you'll provide a deposit yourself to buy out the loan - so it doesn't matter at all what lender you're with, as long as you can get the right LTV. Solicitors costs may be higher to deal with repaying the loan - and you'll need to pay for a couple of valuations, but that's it.

So if you want to remortgage, you have to pay off the loan at the same time and basically go through the valuation process as well. Does the scheme that you are on have any early repayment fees?

Idiophreak

Wickedkitten wrote: »

So if you want to remortgage, you have to pay off the loan at the same time and basically go through the valuation process as well. Does the scheme that you are on have any early repayment fees?

Nope, you can repay in full or in part at any point before the 10 years is up.

You can also have the 10 years extended if you need to, if you can prove "financial hardship" or somesuch.

Wickedkitten

Idiophreak wrote: »

Nope, you can repay in full or in part at any point before the 10 years is up.

You can also have the 10 years extended if you need to, if you can prove "financial hardship" or somesuch.

Oh right so it's a 10 year loan rather than shared equity. Personally those seem a lot better than shared equity because you know exactly how much you have to pay by the end.

Idiophreak

Wickedkitten wrote: »

Oh right so it's a 10 year loan rather than shared equity. Personally those seem a lot better than shared equity because you know exactly how much you have to pay by the end.

It's still definitely shared equity - as it's 25% of the current value you repay - but you can repay it whenever you want without penalty.

gabyjane

pinkshoes wrote: »

Those who are incapable of saving a deposit shouldn't be buying a house, and are a much higher risk of repossession.

What absolute rubbish!! we bought our house without a deposit (well £150 secure fee!) and were earning around the £29k mark as we had loans for car etc to pay off..now they are paid off and we have both had pay rises we now earn around the £34k mark so doubt we will be struggling to afford our £450 a month mortgage somehow! I also have friends who bought without deposits and have had thier house years without any probs..Anyone can have their house repossesed at the end of the day.

Wickedkitten

Idiophreak wrote: »

It's still definitely shared equity - as it's 25% of the current value you repay - but you can repay it whenever you want without penalty.

I see. Cheers for explaining it :beer: