Homebuy Scheme

Onc_Nurse

Hello. My husband and I are currently renting and really keen to get back on the property ladder (lost both our houses with previous partners) as I am a nurse I am hoping to take advantage of buying a new build with the Homebuyers Scheme where you can buy 70% of the property and the remaining 30% is covered interest free for 5 years by the Government and the Builders. Everything seems in order, and I see this as a chance to afford a large enough property with our teenage kids. The fly in the ointment so to speak is my brother-in-law. He seems to think this is a terrible idea and that the 30% remaining equity will cost us a fortune, etc. etc.

Has anyone had any experiences or knowledge of these schemes?

Any impartial advice would be most welcome!

frannyann

I bought using the part buy/part rent scheme, although I had applied for the interest free loan one (this is about 8 years ago now, names are different) I would not do part buy/ part rent ever again, its the worse of both worlds. However younger brother has just bought a lovely flat on the Homebuyers scheme and is very happy as he can see his salary raising enough to purchase the addtional equity in 5 years! So basically make sure you are not steered toward the part buy/part rent as it benefits the builder (they get your rent) better than the equity loan!

bristolgymdude

I am in the process of buying a part rent part buy property that is 9 years old. It appears good value and much cheaper than renting. I would not be able to get on the property ladder at all otherwise. What other advice would you offer?

Cannon_Fodder

It might well appear cheaper than renting, as you are only getting a portion of the property.

If you multiply your payments to reflect 100%, how affordable does it look then?

Someday you will want to get the rest of the property.

Do you envisage your salary rising to accomodate the missing 30% + whatever amount house prices have risen by, in 5 years?

Good luck to you if you can get 30%+ pay rises in 5 years, especially the nurse. I don't suppose Govt debt and 15% to 20% cuts in the public sector after the election will prevent that.

sgh1976

Onc_Nurse wrote: »

Hello. My husband and I are currently renting and really keen to get back on the property ladder (lost both our houses with previous partners) as I am a nurse I am hoping to take advantage of buying a new build with the Homebuyers Scheme where you can buy 70% of the property and the remaining 30% is covered interest free for 5 years by the Government and the Builders. Everything seems in order, and I see this as a chance to afford a large enough property with our teenage kids. The fly in the ointment so to speak is my brother-in-law. He seems to think this is a terrible idea and that the 30% remaining equity will cost us a fortune, etc. etc.

!

It will cost you after 5 years.

Also remember the value of the 30% is not what you borrow from the Government/Builder its 30% of the house value at the time.

I think the HBD scheme is the better of the assistance schemes due to buying the whole house rather than say 75%.

There should be a breakdown of what interest you pay back after the 5 years on the HBD agents website. So worth trying to look into the future and seeing if you can afford the extra the HBD loan will add to your outgoings, on top of a rise in interest rates.

You could of course miss all that out by saving like mad for 5 years and paying a chunk off the loan.

sgh1976

Cannon_Fodder wrote: »

It might well appear cheaper than renting, as you are only getting a portion of the property.

If you multiply your payments to reflect 100%, how affordable does it look then?

Someday you will want to get the rest of the property.

.

On the HBD you are buying 100% of the property. Its all in your name., The difference is you are borrowing the money for the deposit from the Goverment and the Builder. You then either pay them back when you sell, do that and after 5 years you start paying interest on the loan or you can pay it back within the first 5 years.

poppy10_2

sgh1976 wrote: »

On the HBD you are buying 100% of the property. Its all in your name., The difference is you are [STRIKE]lending [/STRIKE] borrowing the money for the deposit from the Goverment and the Builder. You then either pay them back when you sell, do that and after 5 years you start paying interest on the loan or you can pay it back within the first 5 years.

And where do you get the money from to repay the loan when you sell your house? If you use the proceeds of the house sale then you won't have any money left over for a deposit after you have repaid the mortgage. So much for the property ladder.

tb1105

we are going through it at the mo see my Homebuy FTB thread xx

tb1105

also to add...

it is 5 yrs interest free
year 6 is 1.95% interest taken monthly (ours will be £58 a month if we havent paid any of the loan off)
after that it is RPI + 1% of the 1.95% you already pay so for us will be about an extra £5-10 a month.

Repaying £60 a month interest on our £46,000 loan is far cheaper than having it on a mortgage! Both of us are young and our salaries increase annually so we will be saving the extra we earn to pay off our first 10% of the loan asap.

sgh1976

poppy10 wrote: »

And where do you get the money from to repay the loan when you sell your house? If you use the proceeds of the house sale then you won't have any money left over for a deposit after you have repaid the mortgage. So much for the property ladder.

I guess it depends on how long you intend to stay in the property. Looking at figures in general (i.e mine), a person would need to live in the house for approx 13 years before it would give you enough to go towards a deposit and pay back the HBD loan

PS - Cheers for the correction on lending/borrowing.

superfran_uk

We did the OwnHome scheme through co-op which is similar only you didn't have to buy a newbuild. I don't know if it's still running but it was great and I couldn't recommend it highly enough.