Homebuy Direct Advice Please

JAY-SM

Evening All

Im at the stage of attempting to purchase a property involving Homebuy Direct. Tomorrow, were to hand over £500 and sign a Reservation Form with the property involved. However, unbeknown to my girlfriend, im getting cold feet about the whole setup of it.

Iv read countless posts on here regarding this scheme plus articles on other sites and feel quite educated on the process.

Il post the numbers & property.

3 Bedroomed Townhouse: £179,950.00

Less 28% HBD Loan (£50,386): £129,564.00

Less 5% Deposit (£6478.20) £120,085.80

We have got Morris Homes to pay Stamp Duty (i know its not much) and all legal fees. Plus kitchen upgrade & carpet upgrade - which was really surprising as we have in no way as of yet signed anything to see were moving in.

We have been offered a 25 year Mortgage from Natwest @ £666 pcm fixed for two years @ 4.71% - then after to follow the variable.

My concerns are that if interest rates go up, which they only can do, and that pushes are mortgage payments up - by the time the loan interest payments start in Year 6 (which would be around £100 pcm) we could be in a position were we cant pay the loan back using there staircasing method, which i dont no if im at all happy with - for those who are wondering what that is, you have to get your property surveyed at your expense (which determins the equity loan value) and you can then pay a minimum of 10% off each time. Its worth adding that in two - three years my Father is giving me around £20,000 from the sale of my parents house which i would have used to pay some of the equity loan off.

My goal would be to pay the loan off BEFORE we sell, so when we do - its just the mortgage to pay off and whats left can go towards the next house as deposit etc.

We only viewed and applied for the loan 3 weeks ago. I dont know if i have got over the excitement, stepped back and really realised a few things. What are your thoughts on this? Pursue, or sit back and save.

Thanks for reading.

Im sorry if your all shouting at your screens calling me a fool! First time buyer and am very new to all this - our original plan was to stay at home and save for a year for the deposit.

Il finish off by thanking you all who really help on this forum and do research into peoples issues.

Reagrds - James

Andrew_Thomas

at first i though you were going to tell us about getting cold feet about moving in with your girlfriend

you look like you have researched the proposal very well, do you beleive the house is in an area which will improve in the future? and therfore become a more desirable place to live? if so your equity will be worth more meaning that in 2 years when you come to remortgage you will have a higher % ownership. At this point if you wanted to you could pay down the £20k to reduce the balance assuming this makes sense regards the interest rates

VIGILANT22

My dad used to say....If in doubt say No.....Many times I wished I had followed his advice...

JAY-SM

Lol @ Andrew - i should actually say Fiance (still getn used that).

The house faces (and u can seequite clearly) a motorway, a canal & a trainline ... as lovely as the house is - i think it would be trickier to sell in the future. I dont have the 20k yet, thats coming from the house i live in now (parents) there emigrating to Spain, and when they sell i get that (2 years'ish)

My stomach is churning over all this, and i just feel that i should take it as a sign. Im not worried about the financial obligations il be taking on, its more getting out of them once were in. The scheme sounds amazing, until you really pick thru the small print and realise the web that is spun around it to try and get out, and more worringly - keep you in. It seems on the one hand its a great foot thru the door, but to get out and up the ladder is a lil tricky (staircasing payments etc). I know the government & the developers are essentially investing in the property and they expect a return, it just seems its more setup to benefit them, than the first time buyer.

My Dad said the exact same thing to me tonight I think im going to listen.

It isnt ideal not living with my fiance at the moment, but were 10 mins away by car - like i said this all started 3 weeks ago (12 days of that i was working NON STOP and couldnt really do much about it or think about it) and its only when iv jumped on board, got caught up in all the excitment,then gone away and researched and been left pondering whilst my Fiance trawls thru Ikea catalogues...........

Thanks for the replys.

JAY-SM

For those who read this little post and wonder weather i signed or not .......











I didnt Managed to convince the better half that Homebuy Direct wasnt for us. Were going for the more conventional method - save, save & a lil bit more save!

HarveyGal

Well done James. Easy to get caught up and then discover you have made an expensive mistake.
Good Luck to the two of you. There be a house you will be happy and able to buy eventually.

RX-78

Good luck Jay.

Wish I rented first before I bought so I knew what to look out for. It may be a blessing in disguise.

p.s. My ma used to say always co-habit before getting married, you'll never know what unsavoury habit the partner has that you cant stand (I assume she was referring to Dad's constant flatulance)