Homebuy - no deposit?

nic_hr

poppy10 wrote: »

The point is that interest rates currently are historical all-time lows. The Bank of England base rate has never been as low as it is now (0.5%). There's only one way rates can go from here, and they could easily double or more. You shouldn't make your plans for the future assuming that borrowing will always be cheap as it is right now.

That is true. But at some point I definately intend to purchase a house, so having taken this into account I would rather get one now and enjoy the low interest rates for my fixed term at least, rather than wait for a few years when interest rates have gone up and then potentially stay on high interest.

As long as people take into account the impact rising interest rates could have then I don't see this as any reason to put off getting a house now.

Misia_2

Letter from LeaValley:

"...Thank you for returning your Lea Valley Homes application form. We are pleased to advise you that it has been approved for New Build HomeBuy, Resales, and Rent to HomeBuy and your details have been input onto the data base for Herts...

... Please be advised when purchasing under the HomeBuy Schemes you will require a minimum 10% deposit."

"...As you state 75% of £125,000 = £93750, so you would require a minimum 10% deposit of this amount, so £9375. You would then require a mortgage of £84375..."


So my question is - How is it No Deposit Scheme if they require 10% deposit?

I would be extremely obliged for your help!


Misia

poppy10_2

Misia wrote: »

So my question is - How is it No Deposit Scheme if they require 10% deposit?

Yours is a New Build Homebuy scheme, rather than a Homebuy Direct scheme or a MyChoice Homebuy - they are confusingly similar in name, but work in different ways. All funding for MyChoce Homebuy was stopped some time in 2009, and HomeBuy Direct is being gradually wound down following the comprehensive spending review last October.



With MyChoice Homebuy, the government and the builder would give you an equity loan of up to 50% of the price of the property (which you would pay 1.75% interest on) but you would still technically own 100% of the property and would not have to pay any rent. Some mortgage lenders would accept the loan as the deposit. It was a shared equity rather than a shared ownership scheme.

With New Build HomeBuy, you buy a share of the property, say 70%. The housing association buys the remaining 30%, and you pay rent to them for that share. You still need to fund your purchase of your 70% share, and need to have a deposit of at least 10% of that 70% share if you want to get a mortgage.

Ultimately all these schemes are scams, avoid.

kdiver

My experience:

Me and my partner were renting a 2 bed apartment for 450 per month on average salaries. This was paying somebody elses mortgage and on the basis that we could move with 1 months notice or they could ask us to leave with one months notice (it is and extra 175 to negotiate a 6month contract).

Homebuy on new build development- we got a 2 bed apartment 12months ago on this scheme. Property price 70k, 20% equity loan 75% motgage and 5% deposit, which we could realisticly afford. Value agreed by the banks valuers and 5% fixed rate mortgage was agreed for 4 years (3 remaining). Mortgage payment 317 per month, service charges 125 per month total approx 450 per month. This is the same cost to us as renting but we cannot be asked to leave, the apartment is completley personalised to us and we are paying off our own mortgage.

If property prices rise we get 80% of the increase and the builder/govt get 20% of the increase, seems fair to me as there is no way we could afford to save up a 20% deposit whislt paying 450 rent each month.now we have 4 years left before a nominal rate of interest is charged on the equity loans which we can either pay back in lumps of 10% or just pay interest and pay back when we sell.

Property rises fall, great, we only suffer 80% of the fall rather than the 100% if we were not on the scheme. It also means that our savings over the next 4 years will pay off more of the equity loan as if the price falls so will the loan .

In summary if you are looking for a LONG TERM home then this scheme is fab as you short term property rises and falls will not be an issue. If you are looking for a short term move to get on the “property ladder“ then this is probably not the scheme for you in the current market conditions.

Just my opinion.

Thanks