The budget

ryantcb

I will be buying for the first time if I understand the budget. up to 80% interest free loan to help FTB with deposits. Looks like i may be a home owner before i hit my 40's!!

Lokolo

It's only interest free for the first 5 years.

And it's up to 20% not 80%....

ryantcb

not what I read

ryantcb

This was in the metro today
"About 10,000 buyers struggling to get a deposit together will have the chance to take up a five-year, interest-free loan of up to 80 per cent of the deposit.
They will have to be first-time buyers earning less than £60,000 jointly and be looking to purchase a new build.
It will mean a first-time buyer needing a 25 per cent deposit on a £150,000 home will have to save £7,500 rather than £37,500. The average loan, which will have a low interest rate at the end of the five-year period, will be £25,000."



Read more: http://www.metro.co.uk/news/858845-budget-2011-george-osborne-to-offer-help-for-first-time-buyers#ixzz1HQpWMkTd

CloudCuckooLand

"80% of the deposit" is not 80% of the house. 5% from you. Upto to "80% of 25%" = 20% from Govt. For a potential deposit of 25%.

Wonder if Lenders will ask how you plan to repay the 20% - and insist on a repayment vehicle adjustment to affordability ?

Why not just find a 95% mortgage ? At least that why you would pay off a little of it in the 5 years, not have it come as a shock...

Gwhiz

Why is it seen as a social need to buy property and thus deserving of public support?

If you can't afford the deposit maybe it's not the time to buy!

Lokolo

CloudCuckooLand wrote: »

Why not just find a 95% mortgage ? At least that why you would pay off a little of it in the 5 years, not have it come as a shock...

Because you then have to pay 20% LTV interest for 5 years.....

This scheme will at least save the MSErs the 5 years worth of interest

CloudCuckooLand

Lokolo wrote: »

Because you then have to pay 20% LTV interest for 5 years.....

This scheme will at least save the MSErs the 5 years worth of interest

Having 5 years interest free is better than not, I'll grant you. But the whole term of the mortgage needs to be looked at to understand the total cost of ownership.

Wasting 5 years, not denting the outstanding capital will lead to either higher monthly repayments if you were to remortgage to clear the loan in the remaining 20 years (of a normal 25 year mortgage), or require a longer term to keep payments the same.

Remember leveraging? That not one bull quibbled about? Very unusual for them, so it must be right!:cool:

tiny_tear

I read the things on the metro this morning.
it just doesn't make sense also that this loan seems to be available only to people buying (overpriced) new builds - so it will help the developers trying to sell the new builds but not help people like me trying to sell my FTB 1-bed flat

Mallotum_X

Lokolo wrote: »

Because you then have to pay 20% LTV interest for 5 years.....

This scheme will at least save the MSErs the 5 years worth of interest

Not if the mortgage companies see that the borrower only has a 5% deposit and adjusts the mortgage rates available to such a scheme...

like other shared equity schemes its bound to end in problems.

ryantcb

I pay 70% of my net income on rent for a dirty 1 bed dump in north London. Its far more than I can afford but starting at 4am I dont have the luxury of public transport into the city. I live a frugal life and if I had to save a 25% it would take me 15 years. Yet if I can get a leg onto the ladder maybe i will still pay 70% of my income onto a mortgage but at least then I would have some equity after 25 years (maybe) as apposed to noting through renting.