Government FirstBuy Scheme - what where and how!

CLAPTON

3mmy wrote: »

i know its been a while since people have commented, bashed, moaned, winged etc etc etc on this thread but i just wanted to say as a FTB using the firstbuy scheme and working in a financial institute that this scheme is really good for people like myself who are just throwing money at my landlord to have a roof over my head.

Our rent was £650 a month for a 1 bed flat that needed work done to it....we had a game plan of putting aside while living there to have a decent deposit but its just impossible to save money when im burning it through provate rent.

When we had a chat to our local Firstbuy agent it worked out that we had the 5% and a little more and was then able to purchase a new property.

some of you seem to be confusing this with shared ownership...its not, we own 100% of our 2 bed house and are paying nearly £200 a month less than what we were wasting renting.

Yes for some it seems a stupid scheme which gives the government more money for such little work but at the same time there are many of us out here that just cant generate a large enough deposit to do it the 'normal' way.

I think people have made a great point about the bank of mum and dad and the reality is some of us do not have a fall back and need to do it all on our own and yeah i understand that if your earning etc you can put aside but not nearly enough, quick enough to get anything reasonable.

Our new build home is HUGE, yes its a new build and ive always been apprehensive of them but for us it was a great thing to do, and even with the mortgage we are able to overpay every month due to the savings we are making NOT renting.

Yes i know some of you will hate this post but i just thought its worth saying something as ther didnt seem to be any ACTUAL scheme holders posting.

3mmy xx

seems to have worked for you; it would be interesting to see the full details

ChrisLUFC

3mmy wrote: »

i know its been a while since people have commented, bashed, moaned, winged etc etc etc on this thread but i just wanted to say as a FTB using the firstbuy scheme and working in a financial institute that this scheme is really good for people like myself who are just throwing money at my landlord to have a roof over my head.

Our rent was £650 a month for a 1 bed flat that needed work done to it....we had a game plan of putting aside while living there to have a decent deposit but its just impossible to save money when im burning it through provate rent.

When we had a chat to our local Firstbuy agent it worked out that we had the 5% and a little more and was then able to purchase a new property.

some of you seem to be confusing this with shared ownership...its not, we own 100% of our 2 bed house and are paying nearly £200 a month less than what we were wasting renting.

Yes for some it seems a stupid scheme which gives the government more money for such little work but at the same time there are many of us out here that just cant generate a large enough deposit to do it the 'normal' way.

I think people have made a great point about the bank of mum and dad and the reality is some of us do not have a fall back and need to do it all on our own and yeah i understand that if your earning etc you can put aside but not nearly enough, quick enough to get anything reasonable.

Our new build home is HUGE, yes its a new build and ive always been apprehensive of them but for us it was a great thing to do, and even with the mortgage we are able to overpay every month due to the savings we are making NOT renting.

Yes i know some of you will hate this post but i just thought its worth saying something as ther didnt seem to be any ACTUAL scheme holders posting.

3mmy xx

Really pleased to see it's worked for you so far and you are happy. Me and the OH are in a position now where we are considering this scheme.

Where we live (rent) there is a brand new building project that will last for 5 to 6 years. They have released some houses on the FB scheme which are catching our eye.

Our current position is that we are about 85% towards saving enough for a 10% deposit on a house worth around the £135k mark. The house with the FB scheme though is worth £180k (or that is what the asking price is).

We have 2 options - one is to sit it out and wait until we have a 10% deposit, or the other is to go on this scheme which i don't see too many negatives about.

@3mmy - have you considered factors down the line - ie. might there still be new builds in the area finishing completion say in 6/7 years time? If so that prevents you from selling your property at what you bought it for unless ofc house prices have significantly risen?

How overpriced do new builds tend to be roughly?

The reason we are looking at FB scheme although being close to a 10% deposit is because it gives a chance to live in a house that is modern (doesnt need any work like an old build more than likely would) and also gives us a better mortgage deal (ie. 25% deposit rather than a 10% deposit - interest on this much much lower).

Yes we would have to pay interest on a loan after 5 years but if we were planning to be there for 10 years before moving on it wouldnt affect us at all unless the RPI rate went sky high on a continuous basis.

if we sold the house on with negative equity we would not bare the full brunt of that as the scheme means they take 20% of the brunt. We would end up coming out with a bigger deposit than we started and not have spent 8 years paying over £30k+ in to someone elses back pocket.

Going for an older house in our price range in our area would mean we would have to invest some money in to doing the property up over the years (unless this had already happened by previous owners), this would mean more expense than we would have in a new build.

Other than starting with negative equity, i can't see much wrong with this scheme unless i am blindly missing something.

brit1234

ChrisLUFC wrote: »

Other than starting with negative equity, i can't see much wrong with this scheme unless i am blindly missing something.

Re-mortgaging?

ChrisLUFC

brit1234 wrote: »

Re-mortgaging?

So a negative on newbuilds?

With a fixed 5 year deal we would have paid off 18-20k so unless the equity in the house has significantly fallen then I don't think re-mortgaging would be an issue.

ChrisLUFC

Whilst the forum is busy, has anyone else used or seriously thought about using this scheme that could describe their experience?

Thanks

brit1234

ChrisLUFC wrote: »

So a negative on newbuilds?

With a fixed 5 year deal we would have paid off 18-20k so unless the equity in the house has significantly fallen then I don't think re-mortgaging would be an issue.

That's good paying off, I thought the higher pay offs were latter in the mortgage.

Anyway that £18-20K fall is easy with a shared equity property in the South without including the coming falls.

lous_2

Does anyone have the full details and T&Cs of this scheme? I'd specifically like to know how it would affect our ability to negotiate on price. I know it's not unusual to be able to knock 10-20% off new builds just by asking, would going through this scheme affect that?

GreenManG0

Hello,

I have been searching the MSE forums recently for information relating to Shared EQUITY schemes, in particular FirstBuy.

I have found some government information online that may be of use to many of the posters and readers of the this thread:
http://www.homesandcommunities.co.uk/firstbuy

The link below is where my searches began, some pople may find this helpful...
http://www.direct.gov.uk/en/HomeAndCommunity/BuyingAndSellingYourHome/HomeBuyingSchemes/DG_171504

I think if you require specific T&Cs for the FirstBuy scheme then you should approach the property developer to understand what they are offering under their FirstBuy scheme as exact wording could vary from scheme to scheme, developer to developer...

One thing i am concious of is this being a shared Equity scheme, many threads on the MSE forum seem to have confused shared equity and shared owenership, which are different.
I have found a useful resource online detailing the schemes offering assistance to First Time Buyers:
http://www.orbithomebuyagents.co.uk/main.cfm?type=OPTIONS&menuid=369
(This resource is West Midlands based, there are HomeBuy agents in a number of locations: http://www.direct.gov.uk/en/HomeAndCommunity/BuyingAndSellingYourHome/HomeBuyingSchemes/DG_073696

I hope this is useful to some FTBs out there.
Good Luck

Hannah

brit1234

GreenManG0 wrote: »

One thing i am concious of is this being a shared Equity scheme, many threads on the MSE forum seem to have confused shared equity and shared owenership, which are different.

Different but both shared ownership and shared equity are Scams!


*Be aware that the couple of favourable posts above are likely from fake accounts (sock puppets) MSE members. If you are considering either scheme sit down and do the sums and compare them to a normal property. I doubt the figures are right above.

GreenManG0

Brit1234: I would be interested to hear why you find shared equity it a scam?

I have read through a lot of information and T&Cs in relation to FirstBuy, shared equity scheme.

The concept:
You own 100% of the house,
put down a 5% deposit
get a morgage for 75/80%
Have an equity loan for 20/15%

The equity loan is split 50/50 between the govenment and the house builder and they claim back the same percentage of the house sale once it is sold. You can staircase at a minimum of 10% of your homes market value at anytime. or re-mortgage to include the equity loan so you then no longer 'owe' anything to the housebuilder & government (this enables you the rent the property)

The equity loan is interest free for the first 5 years, you then begin repaying in the 6th year at 1.75%, increasing by RPI+1% each year, which on a £40,000 equity loan (20% of a £200k property)would mean payments begin at £58/month. the monthy equity loan payments do not pay off any the equity loan.

Upon sale you repay a percentage of the market value equal to the percentage contribution of assistance received.
If the house prices have fallen you do not pay back the full amount, only the percentage borrowed. so your splitting the risk with the developer & gevenrment. Likewise if prices increase, then an increased percentage is paid.
If you were to buy the property without the assistance of the scheme and the prices fell then you would still loose, its the risk you take with home ownership.

Interesting point made in a FT article: http://www.ft.com/cms/s/2/c1479364-9d89-11e0-9a70-00144feabdc0.html#ixzz1hBC5C5IA
"Most new-build properties have a premium price tag of around 5 per cent because they have not been lived in before - however, when house prices are falling this could put many borrowers, who have only put down a 5 per cent deposit, into negative equity."

The way I view this scheme:
You can purchase a house with a lower deposit. When the 5 years has passed you can remortgage to gain back the equity loan %, and/or have saved up over the 5 years to pay off a portion/all of the equity loan.
For some people this allows them to purchase a property and have morgage repayments that would be lower than rental payments would be on a similar property, allowing them to save the difference to pay off the equity loan in the future.
This may not be appropriate for all people however it gives first time buyers, especially single people, a way to begin.

If you are going in to this scheme with no intention to pay off the equity loan, or remorage to include the equity loan % then you will be stuck paying increasing intrest payments monthly on the equity loan that do not pay off the loan or increase your ownership of the equity %. I could see this as being a pontential problem for people, however if you are away of this and consider this in your overall plan then FirstBuy should allow you to get started.
Anyone considering this would need to look at the figures and workout how is could, if atall, work for them.

I do not undertand how this can be seen as a scam as the information and T&Cs provided clearly state the boundaries and example figures... I think it better for people to be aware of the risk...