Homebuy - no deposit?

tek-monkey

I'm just going through the ownhome scheme, which is a similar one although I'm tied to using the co-op for mortgages. In my situation, this works.

I have secured a 10 year fixed term at 20% less per month than my rent currently is.
I can, at current earnings, afford up to about 8% APR more than my mortgage is fixed at.
The house is nicer than my rental one.
I have no deposit.

The way I see it, most people buy a crap first house then trade up as their circumstances allow. I am skipping the crap house, and getting the trade up first. If my circumstances improve, I'll either start buying out equity or sell and move to a similar property. If they don't, I'll carry on with the shared equity.

Should house prices fall and I need to move, I'll take that risk. Just as I'd have to with a 100% owned house.

poppy10_2

vicshippers wrote: »

You are presuming a 5% fall in house prices though Poppy - presumably in that circumstance you DONT SELL!?

Poppy10 - have you been bitten by this scheme? You seem so unwilling to consider anything other than rather drastic worst case scenarios.

A 5% fall is hardly a 'drastic worst case scenario' - many are predicting falls of 30-40% from here. And just saying you wouldn't sell is hardly an answer - what if you need to move to take up a job offer or to move in with a partner?

vicshippers

poppy10 wrote: »

A 5% fall is hardly a 'drastic worst case scenario' - many are predicting falls of 30-40% from here.

Who is? Because this is what I've been basing my decision on -

-The RICS are saying they will increase.
-National institute of estate agents say 15% fall in 2009 from 2007 prices, and can't see them falling past 25%
- Savills say increase of 20% by 2012

vicshippers

Bump for poppy's response?!

poppy10_2

vicshippers wrote: »

Bump for poppy's response?!

It was hardly worth a response, was it? You quote three VIs (two estate agent firms and a surveyor firm) all of whom have a vested interest in talking the market up. Independent economists are predicting falls of 20% from here, with some going as high as 30-40%.

tek-monkey

One lot say falls, one lot say rises and the rest sit on their hands. Nobody knows, but feel free to feel smug if you're correct. Don't really care myself, they've pulled the scheme I'm on so its either now or save for 6 years while wasting money on rent.

Muhasib

getting back to the thread about HBD, be aware that there are a limited number of mortgage providers offering finance under the scheme and that you will need to go through a recommended broker for the HBD application and mortgage - it is a lot of paperwork and that the maximum assistance is 30% - depending on your income you may be offered less and have to find a deposit especially if the LTV would otherwise come out at over 25%, it isn't a universal solution to a first home.

sgh1976

muhasib wrote: »

it is a lot of paperwork.

Is it?

Paperwork I have had to deal with.

HBD form - About 7 pages, but most of it is ticking boxes. Rest address, previous address pretty bog standard form.

Mortgage Application form was prepaered by the IFA and then he came out to us, took us through everything. We then had to sign a few forms.

In terms of paperwork it really hasn't been a lot.
Even the stuff from my solicitor has been limited so far.

Muhasib

There are more forms from the Homebuy Agent to come after they have assessed your application - have the Mortgage provider assessed the value as the same as the purchase price yet?

Lara44

Hmm... we are considering SO also in London. I am part time and my OH is freelance, so even though we have a pretty good deposit of around £30k, the mortgage lenders don't want to touch us with a barge pole!

In the last few years I ignored SO as I thought it was overpriced, but the flats in my area are really coming down. The service charges remain pretty horrendous, with the cheapest being £100, and I have seen up to £130!!! But as we have such a big deposit we can leverage the loan rates like the OP to have a cheaper mortgage/rent/service charge monthly payment than the rental value for a similar property.

But it seems like it will be quite hard to offload our stake if we need to move for kids etc. Also the flats we have looked at are TINY with basically a worktop and cooker shoved into the living room.

But then the alternative is waiting 5 more years until I finish the rest of my study, in which time we will have paid £30k in rent. And we are still sharing a room in a shared house at 27 and 31 respectively, getting married next year. But if we rent a 1 bed flat we won't be able to save anything for a deposit. Catch 22!