HomeBuy Direct advice please!

rodd-y-ler

I am in the process of buying a new build using this scheme, but a rather annoying thing has happened that I need some advice on.

The property is worth £153,000

With the scheme being 70/30 split:

Equity loan (30%): £45,900
Mortgage (65%): £99,450
Deposit (5%): £7,650

The problem is that my total savings is £16,800, and because of this, the housing association wants to up my deposit amount to 8% (£12,360), and reduce the equity loan to 27%

Fair enough, I can afford that, but that means that after legal fees, lender fees and stamp duty, I will be left with £1,600, which isn't even enough to cover the cost of flooring.

How am I supposed to furnish the flat? No bed, fridge, furniture?

I was told that I should be able to keep £5,000 of my savings aside for furnishings and fittings, but can't seem to find any definitive information on that anywhere.

My first set of figures fall in line with all the specs of the scheme, so I don't understand why I cannot keep my savings for furnishing.

Has anyone else bought on this scheme? Could you advise if you were allowed to retain some of your savings after deposit/stamp duty/legal fees?

Thanks!

carefullycautious

The banks are being cautious (rightly so)

I will never understand why people who buy a home want everything like yesterday.

You have all the time in the world to furnish your flat
You can get bargains on freecycle ebay, charity shops etc.

I can assure you if you live debt free and have to save up for all that you need you will have a greater sense of achievement.

At the end of the day isnt that what this forum is all about?

LittleMissAspie

What are you sleeping and sitting on now? If you really have no bed or furniture or white goods of your own then you may need to wait until you have saved enough for the basics.

If you were buying normally you would need at least a 10% deposit so you are no worse off.

Cannon_Fodder

When applying for these schemes, you are likely to have seen a form something like;

http://www.housingoptions.co.uk/ho2/pdfs/0130_HOAppform_Large.pdf

"Do you have access to savings or funding of £4000 to cover the cost of buying? (please note: this is in addition to any deposit that your lender may require)" (bottom half of Page 3)

(although there are lots of schemes and the regions operate slightly differently, too)

You have £4,400 after the 8% deposit. So they have not left you "short", it appears.

If you had much more, you wouldn't qualify at all for the scheme - it is supposed to be for those that really need help, and they limit/ration the equity loans to ensure they can offer the chance to as many applicants as possible.

Personally, I'd be investigating the option of putting 10% down, on the open market, you might find a wider range of properties available - at better prices, probably.

On the open market, you will find a wider range of Lenders, rather than being limited to Homebuy Lenders, so you should be able to shop around for a better overall mortgage deal, maybe trade to a bit higher rate for a lower fee to improve the cash flow? - and related solicitors fees may well reduce, when out of the 'captive market' of Homebuy Agent recommendations.

rodd-y-ler

LittleMissAspie wrote: »

What are you sleeping and sitting on now? If you really have no bed or furniture or white goods of your own then you may need to wait until you have saved enough for the basics.

If you were buying normally you would need at least a 10% deposit so you are no worse off.

Currently in rented property with a 7 year old desk and a 5 year old bedside cabinet. I have no other furniture.

I cannot buy on the open market as I cannot secure a mortgage greater than £100k, and don't have the savings to make up the deposit, hence going for the 30% shared equity scheme.

I'm buying in London, so there isn't much in my price-range, and I'd rather rent than buy a really horrible cheap place.

With regards to the £4,000 let to cover the cost of buying, surely that is for stamp duty (£1,500), solicitors fees (£1,300) and lender fees (£1,000)?

As it was the housing association that mentioned the £5,000 I can keep back APART from the deposit and fees involving the purchase, I just wanted to see if there was anyone else on here who has bought through the scheme that managed something similar.

Ste_1

I would try and aim for a lower increase. Im not sure if they would consider it but;

Advise them of your situation and say a 7% increase would be more manageable. Every % would give you £1530, and im sure with some sensible bargain hunting you would be able to get the necessities?

Muhasib

The £4,000 of savings is being used by HA's as in my case also (which is HBD), clearly the aim of the scheme is to assist where it is needed and to lend when there are savings available is not the aim. I always had the view that the scheme suited me and would give me the assistance I wanted and so went ahead with my purchase after duly considering the views of the doubters on these forums. I was more irritated by the developers who always quoted the 70% price in the literature and face to face instead of mentioning that the figure is the best but not necessarily what you will be qualified for.

Can you ask to roll the arrangement fees into the mortgage advance which would leave you more?
There is a good point raised about expecting everthing yesterday, I also came from rented accomodation and had nothing at all, my furniture is from ebay or preloved or from relatives, I was surprised at first at the stuff on sale but many times people sell because they change the colour scheme or split up etc and its not to do with the item itself so it doesn't have to be expensive (fortunately), build it up and take a longer view, you'll be in the place for more than a couple of years anyway if you think the scheme is suitable for you as selling with an equity share won't be straightforward in the current market.

rodd-y-ler

muhasib wrote: »

The £4,000 of savings is being used by HA's as in my case also (which is HBD), clearly the aim of the scheme is to assist where it is needed and to lend when there are savings available is not the aim.

This is the thing, my sister (who earns a fair bit) gave me money towards the deposit. This included money to help me furnish.

Had I know this would happen, I would have asked her to only mention in writing to the HA that she was giving me £7,000, then have her give me £3,000 separately later to be used on the extras.

But by being honest and open, I seem to be being penalised.

Muhasib

rodd-y-ler wrote: »

This is the thing, my sister (who earns a fair bit) gave me money towards the deposit. This included money to help me furnish.

Had I know this would happen, I would have asked her to only mention in writing to the HA that she was giving me £7,000, then have her give me £3,000 separately later to be used on the extras.

But by being honest and open, I seem to be being penalised.

have you been open and honest and told your mortgage adviser and the HA were your savings are coming from? From your post it appears you have said to them that the savings are all your own? I remember being asked to declare the source of my deposit to the Solicitor and on the mortgage application as well so whether you start contradicting yourself and if it has any further effects down the line who knows?

My mortgage adviser tried to negotiate to allow me more to have to buy household items but unsuccessfully so at least the HA's are being fair all round and applying the guideline consistently.