New Home Buy Scheme/House offers

Martin_OB

First of all, I would like to thank everyone for the advice they have offered on this website. It truly is a fantastic resource.

My girlfriend and I are first-time buyers, who have found a property that we like. We have done our homework on lenders and solicitors and we hope to be putting in our first offer early next week.

However, while searching the local authority website, I noticed that we may be eligible for the Open Market Home Buy scheme in November/December. Details of which are available by clicking here.

At present, my girlfriend and I would be taking out a 100 per cent mortgage. We can afford to do this, but would we be silly not to wait to take advantage of this offer - particularly as we would probably be accepted on to the scheme in November/December.

Many thanks in advance...

zag2me

If you can get on the homebuy scheme, then do it.

I applied for a really nice place on homebuy at the beggining of the year but was refused as I already own a property.

Its for FTB only wish I knew about that before i bought my first place.

stumpjumper

Bear in mind this is in effect a shared ownership scheme under a different name. The government and the lender will own between them 25% of your home and the value of that share will increase with housing market growth. After 3 years you pay interest on the value of the lenders share (which may well have increased in value to the govt/ lenders benefit). When you come to sell your home you will owe the govt/lender the value of this share which may hinder moves up the housing ladder. Also when the mortgage on your 75% share has been paid you will still owe the govt/ lender the value of the remaining 25% which may well have increased in value quite considerably over 25 years. There also doesn't appear from the website to be an option to buy the share back either.

If you already qualify for a standard mortgage I'd be inclined to go ahead, at least you'd own 100% of your home with no nasty surprises in years to come.

RHemmings

stumpjumper wrote:

Bear in mind this is in effect a shared ownership scheme under a different name. The government and the lender will own between them 25% of your home and the value of that share will increase with housing market growth. After 3 years you pay interest on the value of the lenders share (which may well have increased in value to the govt/ lenders benefit). When you come to sell your home you will owe the govt/lender the value of this share which may hinder moves up the housing ladder. Also when the mortgage on your 75% share has been paid you will still owe the govt/ lender the value of the remaining 25% which may well have increased in value quite considerably over 25 years. There also doesn't appear from the website to be an option to buy the share back either.

If you already qualify for a standard mortgage I'd be inclined to go ahead, at least you'd own 100% of your home with no nasty surprises in years to come.

What happens if the value of the property falls?

mcb2690

Hi there...

We are about to exchange on a property using the current Homebuy scheme and as the scheme is changing have to complete by end of September. In our experience the Homebuy scheme is fantastic as it enables us to get a first step on the property ladder. Without the homebuy scheme we would only be able to afford a one/two bedroom property in this area and as we have two kids this would be a tight squeeze!! This scheme has meant that we can afford a three bedroom house in a good village location.

You don't pay any interest on the funding you get from Homebuy so they just get there %share back when you sell it. So obviously in a few years time this will increase. As far as I know you can also buy back their share at any time. We intend to do this in a couple of years once we are "settled" into paying our mortgage etc.

The whole process with Homebuy has been very easy so I would say that if you can wait until November/December it might be more beneficial than taking a 100% mortgage now. Having said that you do need to find money for solicitors etc etc which can start to add up.

Good luck with your move.

stumpjumper

RHemmings wrote:

What happens if the value of the property falls?

If they fell in the near future you'd end up in negative equity and won't be able to move anywhere anyway, equity loans will be the least of your worries (though the gov't/lenders will loose some money). The likelyhood over 25 years is that there will be an overall increase in property values.

Martin_OB

Ok, so bearing in mind I can get a 100 per cent mortgage now - can I make an offer and switch mortgages if I get accepted on the Homebuy scheme?

My vendor is in no rush to leave the property - could I be honest with him and say: "look, we want your house, we can get a mortgage, but we have a great chance of getting a much better rate in November. Can you take the house off the market - and we'll complete then?..." Could that work?....

Also, Stump Jumper seems to have put a more convincing point why we shouldn't go for the Homebuy scheme - can anyone out there please support or contradict him?....

lynzpower

The most important point when looking at whether to go for the scheme or not is whether you are eligible.

Of course apply, but many people are not eligible.

My freind who is a teacher in london has it, I worked in social services and couldnt get it.