Homebuy Direct Oportunity What do you think

channic1

hhhhhhhhhhhhhhhhhhhhhhhhhhhhhhh

sgh1976

Have you got your mortgage offer? or just the AIP?

I ask because RBS, Nationwide & Halifax all now ask for a 5% deposit on top of the HBD money.

sgh1976

Sorry I have been emailing my solicitor all day and can’t seem to get an answer can anybody tell me how this scheme really works as I am starting to feel very reluctant about the whole thing.

When you sell the house you pay back the 30%. The amount you pay back is dependant on what the house is worth at that time. i.e - You purchased for 100k and then sold for 120k, you pay back 30% of 120k or if you sell for 90K you pay back 30% of that price.

Also if you have done any improvements - extensions etc that is not included on the price for paying back the HBD loan.

You can also start to pay pack the loan before you sell. Although that is in 10% chunks. So if in 5 years you want to pay a bit back, the house is valued and you pay 10% of that valuation.

If you stay in the house for 25 years then at the end of the mortgage term you have to pay back the 30%. Again this is 30% of whatever the house is valued at.

Hope that makes sense

bitsandpieces

Depends what you mean by over valued - new builds often sell for less when they have become 'used' properties. If the surveyor said it may get less than the purchase price on resale, they think that this may be the case here.

How soon would you expect to move? If you're planning to move soon then - by the time you've paid the purchase and sale fees and swallowed the loss in value on resale - this could work out a very expensive place to live: fair enough if you can afford it, but it might be worth seeing how much renting could get you for a bit less money (allowing you to save a deposit). Of course, if prices rise or fall then this will have a big impact on how much you lose or make.

tek-monkey

channic1 wrote: »

My problem is that I still have a feeling that the property is over valued and I am concerned what will happen when I sell the property in the future. I don’t plan to live there very long and am wondering if anybody can tell me what happens if when selling the property and it is worth less than the above what will happen to the 30% shared equity. I know that the bank gets first charge and that BDW Trading and Homes & Communities agency will get the second, but assuming if the property is sold for less then the second charge will also be less but will I have to make up the difference of the original loan.

I think that depends on the scheme. On mine (My Choice Homebuy) if I sell in the first three years I have to make up any shortfall. If I sell after that, they just take their % of the property sale value regardless of what it is.

edgex

er, where is it?
if you want our opinions on whether its overvalued



though £221k for a 2bed flat is bonkers!

g_attrill

channic1 wrote: »

Hi,
I understand that on resale there will be additional costs and if the value of the property were to be sold for less as long as there is still enough to pay for the first charge i.e. bank then what is left is the 30% equity loan.

Please correct me if I am wrong here.

The explanations on the websites say that if the values go down, they will take what is left after paying the morgage, but I had a quick look at the January 09 dated "buyer's guide" and it's example is basically that they take 30% of the value, whether it has gone up or down, and the wording is practically the exact opposite of the other sites!

When you sell your home, the HomeBuy Direct equity loan documents commit you to repay a percentage of the market value equal to the percentage contribution of assistance received.

This means if the market value of your property falls below the level at which it was first purchased, you will repay less than the original amount the Agency and the housebuilder contributed to the original purchase.
....
In the example above, if the buyer chose to sell their HomeBuy Direct home at the start of year six (after owning the property for five years) and assuming property values decreased by 5% annually for the first three years followed by two more years when they rose by 5% annually, the buyer would have to repay £56,715 for their HomeBuy Direct equity loan and use the remaining £132,336 to settle any outstanding balance on the mortgage provided by their lender.

mermole69

Sorry to jump in on your thread but my husband and I are currently trying to buy on HBD. Just applied for mortgage with RBS. How long did it take for you to get the mortgage agreed?

GDB2222

Channic, I think it actually works like this:-

purchased 100k
bank loan 70K
equity loan 30k (= 30%)

sold 80k
bank loan 70k (first Charge)
equity loan return 24k (= 30% of value)
Nothing to purchaser, and you owe 14k to HBD etc.

g_attrill

Whoops forgot to follow up on this myself - although I replied at the same time as your examples. As GDB2222 says, you will owe a straight 30% of the sale price, regardless of how much your mortgage is. I assume that in the case of a large shortfall you would pay off the mortgage first and then arrange repayment of the loan - the document (that I linked to) wasn't clear, although implies that the equity loan is a first charge.

knightstyle

Check and check your personal terms and conditions. Shared ownership schemes take 30% of the sale price if you make a profit, and 30% of the original purchase price if you make a loss. If there is not enough equity you take the debt with you!
Heads they win, tails you loose!