HomeBuyDirect - New House

an2003dy

Hello, basically, me and my girlfriend are currently in the process of buying a new build Barratt Home in Brough, East Yorks with the Government backed HomeBuyDirect Scheme. The house is priced at £167995 with the house builder and government each paying 15% each of the deposit,this means we do not have to put down a deposit. After being valued by RBS they have de-valued the property by £27000!! So, now Barratt are saying they will not drop the price by that much, and it is 50/50 that we will get the house now, unless we can come up with a 5% deposit! Now, what i am asking, is....do i get an £7500 loan from Tesco to pay for a deposit (HomeBuyDirect will pay 12.5% and the builder 12.5% if this is the case) Or do i accept the original price of the house and end up being in negative equity for ages??? I'd rather pay off a loan of £7500 then be paying £27000 over the asking price!! I need some help please people!! I need some bargaining chips!! We really want the house and can't afford not to take advantage of the HomeBuyDirect scheme, nor do we want to be paying over the odds for something either!! Oh yes, also with the deposits being paid by the homebuilder and government, we will have a mortgage of around £117000. many many thaks in advance people!!

spammylou

You shouldn't borrow money for a deposit.. if you don't have it don't do it. Partly because you won't have any true equity in the house. Barratts have obviously overinflated the price of the house so they can offer you "No deposit". Can you try another lender and see what the valuation comes back as? I realise you "really want" the house but there are lots of other GOOD houses on the market that won't be overpriced and will be well built too (newbuilds invariably aren't). The bottom line is DO NOT GET YOURSELF INTO DEBT you cannot repay just because you WANT something!! Hope this helps!! x

CloudCuckooLand

It is likely a loan will be spotted by your lender. They won't like you using a loan to provide the deposit. They will probably insist on its repayment before releasing funds.

Tell the developer to reduce the price, or else. Mean it. You will find another one.

There is a reason the valuation has come back so low - its not worth that much. As you rightly surmise, you'd be in negative equity from day 1. Lots of people got caught out buying just as the crash hit, and are now in NE, not their fault you might say. Those who volunteer to go into NE, knowingly...that's a different kettle of fish!!

RBS are 80% owned by us/Govt...they know what they have to do to turn the corner but the Govt scheme doesn't reflect it in reality on the ground. Brilliant joined-up thinking, as usual.

This whole scheme/scam makes me angry. With FTBs thinking they are getting left behind, panicky decisions are made with poor financial advice.

If you cannot afford a deposit for a 70% purchase, how do you plan funding a deposit on 100% when you need to move to something bigger. Or afford to have kids? This whole scenario is unsustainable at a personal and macro-economic level.

an2003dy

Can't borrow from another lender, because the government backed scheme bought RBS and Halifax, and these were the only banks dealing with HomeBuyDirect, Halifax has since dropped out now, so restricted to just RBS. The HomeBuyDirect scheme now only deals with new builds to get the market moving again. It is designed for Key Workers and first time buyers like myself! I have done the maths, and i can afford the loan, also with the price of the house de-valued, the mortgage will be lower,although i haven't got the new figures yet! Thanks!!!

spammylou

It sounds like you know what you are doing then? Just watch out though if the mortgage rate rises.

an2003dy

CloudCuckooLand wrote: »

It is likely a loan will be spotted by your lender. They won't like you using a loan to provide the deposit. They will probably insist on its repayment before releasing funds.

Tell the developer to reduce the price, or else. Mean it. You will find another one.

There is a reason the valuation has come back so low - its not worth that much. As you rightly surmise, you'd be in negative equity from day 1. Lots of people got caught out buying just as the crash hit, and are now in NE, not their fault you might say. Those who volunteer to go into NE, knowingly...that's a different kettle of fish!!

RBS are 80% owned by us/Govt...they know what they have to do to turn the corner but the Govt scheme doesn't reflect it in reality on the ground. Brilliant joined-up thinking, as usual.

This whole scheme/scam makes me angry. With FTBs thinking they are getting left behind, panicky decisions are made with poor financial advice.

If you cannot afford a deposit for a 70% purchase, how do you plan funding a deposit on 100% when you need to move to something bigger. Or afford to have kids? This whole scenario is unsustainable at a personal and macro-economic level.

I see what your saying, but you can pay more off on your mortgage to own more of the equity. We could live together and rent,and save up for a deposit, but that'll take ages, we are both renting seperatly at the mo, me in a shared house and her in a very small 2bed which is due for demolition very soon, and i feel renting would be dead money!

I might just go around in the morning and say to the woman at the show home that i want it dropping or else i'm going to go elsewhere, hopefully a lil blagging MAY help....i hope so!!

g_attrill

I would say don't rush (or be rushed), and certainly don't start breaking your piggybank to scrape money together to bridge a gap if a lender undervalues the house, keep looking and perhaps buy something less than your "perfect home" but on a standard mortgage.

edit: On those houses - are you able to find out what they have actually sold for recently, and what one not on the shared equity scheme might go for? I doubt they will drop £27k because it would look pretty bad on the land registry data.

an2003dy

g_attrill wrote: »

edit: On those houses - are you able to find out what they have actually sold for recently, and what one not on the shared equity scheme might go for? I doubt they will drop £27k because it would look pretty bad on the land registry data.

No, not yet...only just started building them, although there are some other very simular designs, same exterior,different layout inside. The said houses can be both bought with HomeBuyDirect or just normally. I have been trying to find out prices all evening, i feel like knocking on the doors of the people who have just moved in!!! Lol! I've used all the websites available to me on this website as well.

brit1234

an2003dy wrote: »

Can't borrow from another lender, because the government backed scheme bought RBS and Halifax, and these were the only banks dealing with HomeBuyDirect, Halifax has since dropped out now, so restricted to just RBS. The HomeBuyDirect scheme now only deals with new builds to get the market moving again. It is designed for Key Workers and first time buyers like myself! I have done the maths, and i can afford the loan, also with the price of the house de-valued, the mortgage will be lower,although i haven't got the new figures yet! Thanks!!!

Financial sucide, I thought this site was Money saving expert and not money losing expert. Scary stuff that people are prepared to risk their future for an overpriced property.

:eek::eek::eek::eek::eek:

an2003dy

brit1234 wrote: »

Financial sucide, I thought this site was Money saving expert and not money losing expert. Scary stuff that people are prepared to risk their future for an overpriced property.

:eek::eek::eek::eek::eek:

This is why i am asking for advice!!!!! Everybody has something different to say....thanks anyway, keep them coming please peeps!!

Caesar

I think you may have your figures wrong, the 5% deposit is in addition to the 30% that the Govt and Housebuilder put in. In your example the headline price would be £167,995, the 30% loan from Govt/Barratt would be £50,399, this would leave £117,597 and you would need 5% of this figure which would be £5,880. This is how I understand the scheme works.As for Halifax not doing Homebuy, this is wrong, Halifax definitely do it, it may be that the developer has used up the 'quota' of Halifax mortgages for the site, they tend to have to use an equal amount from both RBS & H'fax if you go through the recommended FA's.

As others have said, it's not advisable to get a loan for the mortgage, if there is a relative that would help you out with the deposit this would be better and not affect your mortgage-ability.

In terms of the price of the property, it seems strange that RBS are down-valuing it so considerably, I've not heard of such a large drop before.If Barratt's aren't budging on the price it's possibly because they have sold others at that price and thus think they can achieve it whether you reserve or someone else does.

Don't rush into it though, it's a big investment and I'd make sure you've got all your figures 100% checked before signing anything.

Hope this helps.