Homebuy direct?

spud211

My advice is to look at where you will be in the next 5 years. Can you save up 20% of the current value of the property that you want, over 5 years?

If so then homebuy direct may well work for you, especially with prices (and therefore values expected to drop).

The main disadvantage of homebuy is (as has sort of been mentioned) that you have to pay around 10%+ over the real value for your house. This is blatantly obvious when you ask the developer "OK, so how much will it cost me to buy if I don't use homebuy direct" and then they drop the price by £20k. Thats how much more you are paying for the "privilege" of being on the scheme.

If however the price of your property falls in the next 5 years, you pay back less..so your net premium is actually lower - maybe £15k or £10k instead. This makes it a slightly better deal.

How I would calculate it is how much would you spend on rent over the next 2 years while you save? If its less than the discount that the housebuilder would give you on your property, then stick to renting - its cheaper and will save you money. If you would spend more on the rent..then go for homebuy, as again you will save money. Either way you are throwing away money without (effectively) gaining anything for it.

I think that anyone will agree that if you can afford to purchase without being on the scheme then you should do, but if you are desperate to buy now then they can be a great help.

cocomonkey_2

I agree with you Spud - it's based on your own personal circumstances on whether Homebuy is right for you. We can afford to back the 20pc over the next five years and as you say will actually do well from it probably due to crashing house prices and we fully intend to buy the first 10pc asap!
I don't think over inflation of new builds are unique to homebuy direct though -there are houses in our close which were not on homebuy direct and purchased in the "normal" way they have paid the asking price as did we. What you won't get on homebuy which they likely got is lots of extras thrown in as negotiation. However the carpets you often get etc are awful - I prefer the carpet I bought myself!
It is also subject to housebuilder - Redrow I have to say are excellent and we got an upgraded kitchen, bathroom tiles and fitted wardrobe as standard. Other housebuilders I have heard you literally get nothing - sometimes no back fence or door handles!
Just make sure you do your research!

ztan

It can definitely work!

I'm in a similar boat to cocomonkey and have just moved into our lovely new 2 bedroom coaching house. We've brought through a private developers version of homebuy- although the principle is the exact same.

I would recommend however, that if you look at this scheme seriously, you look at what your options would be for overpaying on the mortgage. This would allow you to keep as far ahead of the negative equity bubble as possible, and allow you to remortgage, paying off the shared equity part with minimal disruption.

If you want a bit more info, you can check out my thread in Mortgage Free Wannabe- which I have started to encourage others to see the benefits of shared equity and keep me on track with my overpaying plans!

Good luck, and don't let the doom and gloomers who are dead set against it get to you- they haven't been there, so they don't know for sure!

Blacksheep1979

Yes, don't listen to those who are smart enough to avoid silly schemes like this and who know that brought is the past tense/past participle of bring and bought is the past tense of buy.

Just because I haven't smoked crack whilst drinking a can of special brew and driving a car down the motorway the wrong way at 100mph doesn't mean I don't know it's not a good idea.... Often people who have made a bad choice are unwilling to admit it to themselves let alone others and so I'd say beware those who are in these schemes with their rose tinted specs on.

ztan

Another utterly charming helpful post from someone who clearly has no experience of the scheme, but thinks because they might have a mortgage, they in fact know best. (cheers for the english lesson too by the way)

Obviously everyone on here is entitled to their own opinion. Some of us are going to see the benefits of a scheme like this, and other's aren't.

If you have the chance to get on the property ladder, then please do it! It is getting harder and harder, and you will eventually miss out on your opportunity. You will ultimately make up your own mind, and do what is right by you. Just keep an open mind!

Good luck to the OP

AndersLimpar_2

The less you have to put into a house to buy it, then the worse the ''deal'' will be. However, we all have different monetary abilities and timeframes to work to, i only had 10% deposit so got the best rate i could at the time to get onto the ladder. Could have got a lower rate had a waited another year but wanted tog et on the ladder as soon as i could.

As long as your happy then go for it!

spud211

Blacksheep1979 wrote: »

Yes, don't listen to those who are smart enough to avoid silly schemes like this and who know that brought is the past tense/past participle of bring and bought is the past tense of buy.

Just because I haven't smoked crack whilst drinking a can of special brew and driving a car down the motorway the wrong way at 100mph doesn't mean I don't know it's not a good idea.... Often people who have made a bad choice are unwilling to admit it to themselves let alone others and so I'd say beware those who are in these schemes with their rose tinted specs on.

Please go and troll elsewhere - if you don't think that the homebuy scheme is a good choice for this situation and have nothing constructive to say, then don't say it. Helps no-one and makes you look (and sound btw) like a total idiot. For the record - not all of us who think homebuy direct can be a good idea have actually taken advantage - I didn't in the end as it wasn't financially sound for me in my situation, but it may well be and is for many others.