Government to allow first time buyers to use pension pots to reach property ladder

kabayiri

Without discussing the rights or wrongs of the scheme, do the numbers even stack up ?

If someone has been working for say 9 years up to the age of 30, and been putting away £100 a month into a private pension, what sort of pot could they draw on? Would it be enough to cover a shortfall on a £30K deposit ?

I'm not sure if the scheme works number-wise but these are difficult times and we should look at all options. There is no point in a decent pension pot come retirement if you then have to fund rented accomodation in retirement.

heathcote123

Graham_Devon wrote: »

It's already been discussed. The pension proposal is absolute lunacy.

Can't see it ever happening. Just says the proposals included the suggestion, which we already knew. If it does happen, more fool those who raid their pensions to buy a house. It's an act of sheer desperation.

It's perfect, it kicks the pension can down the road a bit further for whoever happens to be in power at the time, and helps to solve a current problem.

Consider it nailed on. You didn't expect anything other from politicians did you? Always assume short term fixes and self interest from them and you won't be dissaponted so often.

Graham_Devon

HAMISH_MCTAVISH wrote: »

Don't think it's going to work like that.

AFAIK, the proposal is for them to be able to use a portion of the pension fund in the same way the Lloyds "lend a hand" scheme works.

So that someone with a 5% deposit could give the bank a guarantee of another 20% secured against their pension fund. But the bank would never take the funds unless they defaulted on the mortgage.

And?

You think thats better?

If you struggle, you not only lose your house, but also a portion of your pension pot?

Woohoo. What a lightbulb moment. <sigh>

HAMISH_MCTAVISH

Graham_Devon wrote: »

And?

You think thats better?

For the 99% of people who don't default on a mortgage?

Yes, absolutely.

The vast majority of people who use this scheme will be far better off over the long term as a result of this proposal.

If you struggle, you not only lose your house, but also a portion of your pension pot?

You're not losing the same money twice Graham. :cool:

If you default in the UK, the bank will pursue you for the balance if there is a shortfall. It makes little difference whether you end up repaying that money to the bank, or whether you end up repaying that money into your pension pot.

chewmylegoff

HAMISH_MCTAVISH wrote: »

For the 99% of people who don't default on a mortgage?

as in the other thread where this point came up, the overall default rate is not relevant as would be aimed at the sector of the market most likely to default, therefore people taking advantage of the scheme would be more likely to default than the national average. how much more likely, who knows.

paulmapp8306

Stupid idea.

Ive struggles to find a deposit (inheritance is coming to my rescue) but I would never touch my pension pot. Wouldnt even risk it. Id prefer to rent my whole life then for the government to pay my rent in my old age if/when my pot runs out than risk that pot to buy now.

The only answer to the property issue is mass building of prefab/flat pack homes - that are cheap and fast to build. Not for the "buy" market, but for government owned social housing. It would pay for itself in no time as high private rents, and even lower housing association rents would not need to be subsidised by the government. The only rent they would need to charge/offset (depending on circumstances) would be maintenance.

Going this route, the housing shortage for low cost rental/social homes would be solved in 2-3 years, and the cost of benefits would be vastly cut as well helping the deficit.

The ONLY reason I can see for this not happening, is the government not wanting to upset the rich owners/investors/banks. i say this as someone who doesnt want, and wont qualify for social housing - and if i can do anything about it will buy not rent privately. it doesnt mean that what is right on a social level is right for investors.

gailey_2

paulmapp8306 wrote: »

Stupid idea.

Ive struggles to find a deposit (inheritance is coming to my rescue) but I would never touch my pension pot. Wouldnt even risk it. Id prefer to rent my whole life then for the government to pay my rent in my old age if/when my pot runs out than risk that pot to buy now.

The only answer to the property issue is mass building of prefab/flat pack homes - that are cheap and fast to build. Not for the "buy" market, but for government owned social housing. It would pay for itself in no time as high private rents, and even lower housing association rents would not need to be subsidised by the government. The only rent they would need to charge/offset (depending on circumstances) would be maintenance.

Going this route, the housing shortage for low cost rental/social homes would be solved in 2-3 years, and the cost of benefits would be vastly cut as well helping the deficit.

The ONLY reason I can see for this not happening, is the government not wanting to upset the rich owners/investors/banks. i say this as someone who doesnt want, and wont qualify for social housing - and if i can do anything about it will buy not rent privately. it doesnt mean that what is right on a social level is right for investors.

I agree with you about flatpack but prefabs not very popular.
Dont know if anyone ever watches american extreme makeover but they manage to build the family a massive wooden home in a week its so quick compared to brick!

Theres also another pone of lifestyle channels called my flat pack home they not what they used to be they like huge kits ordered from germany.

Remember seeing some bloke build his family lovley wooden home on grand designs but he was left the land.

Its something I would love to do as he built massive home for 100grand.
but lands so expensive and not sure you can get morgage on unbuilt or house not made of brick?

of course when see hurricanes on news think build your houses with brick people but here its not the case.

For us a a family would love our own house wouldent mind if it was made of wood chalet style. I know the costs of doing that would be a bargain but due to planning permission, cost land and lending criteria its impossible dream.

We trapped in private rental not eligible for social but cant buy.
The right to buy on sky news annoyed me this morning as know a few people who made lot of profit from buying council house then selling it for profit so much so that ex council house is priced quite high here.

Housing association newbuilds are like shoeboxes certainly wouldent be big enough for a lot of families our freind single male did part buy part rent in ha house/The old council houses were huge.

As a child we lived in one for 6months privatly rented from landlord who brought and rented was massive had huge garden, 2reception rooms, kitchen with pantry, large bathroom and 3decent sized bedrooms much bigger than private newbuild we rent now.

I dont really know what the solution is but right now its such a mess.

we dont have private pensions when i was young never considered it then had family and felt couldent afford it we thourght eventually we buy a house then downsize giving us a pension as last few years people felt property was safer investment than some pension funds with things on news about people losing their pensions and some dependant on stock exchanges which is risky right now. guess putting pension into property still safest option?

Dont forget the green brigade campaigning against building houses.

round here lots of private development but not the infrastructure and schools to meet the needs of all housing built its like a timebomb im dreading secondry application time as the schools are full.

Graham_Devon

HAMISH_MCTAVISH wrote: »

For the 99% of people who don't default on a mortgage?

Yes, absolutely.

And how many of those will be using schemes to buy a house because they can't afford it through the normal route.

You are massaging statistics again.

The type of people using this scheme will be more likely to default as they can't afford it without the use of such schemes in the first place.

You clearly are not dense. So I often wonder why you apply such a stupid statistics brush to stuff, which you inevitably get picked up on, in your posts.

paulmapp8306

Well, the infrastructure is really the problem with lots of flat packed homes. Shops, hospitals, schools etc etc etc.

As far as the greens go - they can Pi** off. It is fine to be concerned about green issues, but ultimately everyone has to live somewhere. Over 95% (estimate) of England is still rural, so growing existing towns (rather than cities) to accommodate the growing population shouldnt be an issue.

redbull5

Think its a great idea, for me in a few years anyway.. i pay 10% a month so will end up with a decent pension so hopefully this should benefit me!