Government FirstBuy Scheme - what where and how!

johnny_storm

reykjavik78 wrote: »

People can do what they want with their money...it's completely up to them...it's not my life...but people may also have to accept that a wrong choice may cause financial hardship...They need to think hard before they act because they will have to live with the decision not me...

But what we have actually seen is the "wrong" decision actually ending up being "right" as the government stepped in to reduce interest rates to virtually nothing.

The people who have actually ended up in the worst position are those who failed to act thinking they knew best.

Trifid

OK, what about the 2 scenarios below for a £190K house on a 25 year mortgage.

1) By the end of year 6 you will have the cash to buy out the 20% of shared equity.

2) At the end of year 6 you remortgage buying out the 20% share with a combination of money saved, the equity you have built up (I've worked it out at £22K paid off the mortgage?) and if required taking out a slightly larger mortgage while maintaining 25% in equity.

Jimmy_31

johnny_storm wrote: »

Be careful about reading too much into what they say on HPC, you might as well form your opinion on immigration by reading the bnp site. They are that extreme, blinkered and close minded.

Do you want to imitate people who missed the boat, have waited 10 years for house prices to drop, convinced they are correct? Or just get on with your life.

How do you know that they have waited 10 years for the market to crash, maybe a lot of them are just like me who was born at the wrong time so had zero chance of buying my first home in my early to mid 20s.

Ill be totally honest and say that i am hoping and praying for a house price crash so that i can buy a decent home for a fair price, i know that some people on here will think im not a very nice person because i want a crash, due to the thousands of people who will lose their homes or not be able to move up the ladder but if all these people who payed astronomical prices for their homes during the boom had just gone and rented or stayed at home with their parents then the boom wouldnt have happened an i wouldnt be looking at paying 5 6 or 7x my wage for a home.

Its not just the banks fault that the boom happened, everybody who payed the laughable house prices helped it happen as well.

reykjavik78

johnny_storm wrote: »

But what we have actually seen is the "wrong" decision actually ending up being "right" as the government stepped in to reduce interest rates to virtually nothing.

The people who have actually ended up in the worst position are those who failed to act thinking they knew best.

The current IR is at a historically, low "false" rate..Once they do rise, it will be really interesting to see what happens to the housing market, and to those who overleveraged / MEWed..

Setting purposely low, long term IR's favour the profligate and punishes savers... That seems totally out of kilter to me... Moreover, the youth are being hit left, right and centre... be it stupidly high house prices, no jobs, massive tuition fees..the list goes on...

Is it right that millions of young people have to stay and home, and unable to start a family (if they want to) because of the insanity of the housing market?

reykjavik78

PROPERTY_OWNING_CLASS wrote: »

Yes it is right, because what are you 33, 34 and you've waited on the margins hoping to initiate a housing crash and pick up a dream house on the cheap. More fool you muppet. Keep drinking the HPC koolaid. I hear it's laced with lsd.

Oh dear...it's resorted (a poor attempt mind you) in throwing pathetic personal insults..You know that you have won the argument once the other side has resorted to such tactics... Nice one "Hamish", "Sibley" or whatever your name is... By the way, how could I "initiate a housing crash"? Bit of a puzzler me old sport...

As for those who have maxed out their credit cards, MEWed away and so on...It's hard to have any sympathy if they lose the lot...Let them face the consequences...

Jimmy_31

reykjavik78 wrote: »

Oh dear...it's resorted (a poor attempt mind you) in throwing pathetic personal insults..You know that you have won the argument once the other side has resorted to such tactics... Nice one "Hamish", "Sibley" or whatever your name is... By the way, how could I "initiate a housing crash"? Bit of a puzzler me old sport...

As for those who have maxed out their credit cards, MEWed away and so on...It's hard to have any sympathy if they lose the lot...Let them face the consequences...

If you are in the situation described by the poster above who strikes me as a sensible individual then dont worry because when you lose your house the government will now loan you plenty of cash that you payed them in taxes back to you to help you get back on the housing ladder, obviously you will have to pay intrest on the loan but hey whats a few more quid eh.

I know the scheme is only for first time buyers but i cant see that stopping a lot of people who have just lost a home trying to get back into the game, when you apply for the scheme just do what you did when you got your 7x salary mortgage and bend the truth a little, follow these tips and you will be back in an overpriced shoebox in no time at all.

Thats all for now, i may check back later once ive browsed rightmove and checked out todays deductions, the person who came up with propertybee deserves a medal for all the money they will save me:rotfl:

reykjavik78

Jimmy_31 wrote: »

If you are in the situation described by the poster above who strikes me as a sensible individual then dont worry because when you lose your house the government will now loan you plenty of cash that you payed them in taxes back to you to help you get back on the housing ladder, obviously you will have to pay intrest on the loan but hey whats a few more quid eh.

I know the scheme is only for first time buyers but i cant see that stopping a lot of people who have just lost a home trying to get back into the game, when you apply for the scheme just do what you did when you got your 7x salary mortgage and bend the truth a little, follow these tips and you will be back in an overpriced shoebox in no time at all.

Thats all for now, i may check back later once ive browsed rightmove and checked out todays deductions, the person who came up with propertybee deserves a medal for all the money they will save me:rotfl:

Shared ownership brings all the downsides to owning, and virtually no benefit (the only real one I can think of is a secure long term tenure of a home)...

You will be liable for all repairs (not sure about schemes where you have only have a 25% share, but I wouldn't be surprised), you are liable when your house drops in value; can you move? With huge difficulty...Will you ever own your home outright? Possibly, but it's not guaranteed... IO mortgages are also a con...you are just a glorified tenant...

Banks are only going back to sensible lending practices...the lending criteria should be 25% deposit, and a mortgage which is 3.5x income. It was those mortgage brokers who "encouraged" people to lie on their mortgage applications (self certs) which has had led us down the path we are down.

Last time I heard, Property Bee needs needed funds & was going through a process of changing hands...not sure what happened about all that....

Jakestar

Not meaning to hijack, but there seems to be some good discussion re FirstBuy so thought I'd keep my question within the thread. I could potentially go for this scheme in 6 months time where I'll have sufficient deposit / salary, but I too have my doubts.

My cousin has a theory that if he went into this scheme by paying off the mortgage would then allow him, say after 5 years, to use the equity he has gained as a deposit (which he presumes would be atleast 10% for what he wants to buy), rather that at present saving £xxx per month and paying rent.

Essentially his theory is that (using an example for demo purposes) if he is currently paying £450 pcm rent and saving £450 (£900 total out of his account) he would be on balance "saving" more towards a deposit by paying £900 (less the loan) towards the mortgage each month (which he belives would be more than £450, therefore a net gain for him).

Does his logic make sense and would this work in reality?

geoffky

Jakestar wrote: »

Not meaning to hijack, but there seems to be some good discussion re FirstBuy so thought I'd keep my question within the thread. I could potentially go for this scheme in 6 months time where I'll have sufficient deposit / salary, but I too have my doubts.

My cousin has a theory that if he went into this scheme by paying off the mortgage would then allow him, say after 5 years, to use the equity he has gained as a deposit (which he presumes would be atleast 10% for what he wants to buy), rather that at present saving £xxx per month and paying rent.

Essentially his theory is that (using an example for demo purposes) if he is currently paying £450 pcm rent and saving £450 (£900 total out of his account) he would be on balance "saving" more towards a deposit by paying £900 (less the loan) towards the mortgage each month (which he belives would be more than £450, therefore a net gain for him).

Does his logic make sense and would this work in reality?

What happens if as expected house prices drop and a lot of people consider them to be 30% out of kilter... you would of committed financial suicide..stuck in negative equity.

hammond_cheese

I don't understand how people can make sweeping statements that just dismiss all shared-equity schemes. I have researched these for some time, and know people who bought through the HomeBuy Direct scheme. Obviously there are many developments where such schemes are more of a curse than a blessing, but it's simply not fair to apply this logic to everything across the board.

The assertion that prices through the scheme are inflated is not always correct. I have seen developments where the shared-equity properties are subsidised to begin with by as much as 10-15% (due to council agreements to get planning permission, housing association/social enterprise as developer etc.). So, even paying the asking price when private buyers of other units are getting a discount, the shared-equity buyer can be better off. There have been numerous developments where specifications of HBD units have been the same as private units, which have sold well.

As long as you do your research and buy into a development where private units are selling well (and are equivalent or at least not too superior to the shared-equity ones), and the shared-equity units do not end up being bad value to begin with, I see there being far more advantages than drawbacks. You can treat the Government's contribution as a low-interest mortgage that doesn't need repaying for five years. The old HBD scheme even had a cushion whereby the Government would take an additional hit on their share if negative equity meant that the person couldn't afford to pay their mortgage lender back.