Business proposal to help first time buyer - thoughts?

BitterAndTwisted

What is it about the phrase "fundamentally flawed " you don't understand? If you work for a mortgage lender then you ought to understand that you'll need to buy a property with your own money as deposit. If you can't save up a deposit how do you propose to be able to afford the cost of running a home and being solely responsible for all of the repairs and maintenance in the long-term?

In the bad old days before the flood, when lenders hadn't lent themselves down the plughole, old-fashioned building societies insisted on their prospective borrowers being savers with them for a very long time. This provided some reassurance that their prospective mortgagee could actually afford their repayments. If you can't save you can't pay a mortgage, Simple.

oldskoo1

Its nice to have some original thought - keep thinking and you will come up with something.

Just remember if someone has 15k to lend they would most likely get a buy to let town house or flat. They get a regular income to cover the mortgage and re-value and borrow equity to play the game again in a few years time. You would have to declare the source of that money too afaik.

You would have to find a very kind investor to lend you 10-15k who gets an uncertain return on just his 10k.

Best option is to rent and slowly build up a deposit or take part ownership on a new build. 20% injection.

But in my opinion, someone who shows natural initiative to solve problems even if they are flawed, providing they attempt in the first place usually tend to do quite well for themselves. So just keep going and see what happens.

Opinion

oldskoo1 wrote: »

But in my opinion, someone who shows natural initiative to solve problems even if they are flawed, providing they attempt in the first place usually tend to do quite well for themselves. So just keep going and see what happens.

There's no initiative here. None. He wants a person to lend him money that a bank won't. Simple.

betmunch

burnsy89 wrote: »

I work for the mortgage lender. As far as they're concerned the deposit is from personal savings with another provider.

You work for a Mortgage Lender and your advocating Fraud.

kingstreet

I'd like to congratulate the OP on re-inventing the "top-up" scheme of the 1980s. This scheme enabled building societies to lend 95% with a further 5% "top-up" loan provided by an insurance company.

I concur with the other views expressed. The "investor" would, I imagine, need to see a considerably greater profit in return for his capital, which is after all, secured only by a second charge. In the event of default on the first mortgage, the investor would be lucky to see any capital returned at all in the current market.

The inherent risk involved in a second charge is probably the reason why the likes of First National, Wellcome, Swift etc charged considerably higher rates than those associated with a first charge.

Perhaps what we need is the re-invention of the other 1980s phenomenon, the "mortgage indemnity guarantee" to protect the investor?

Loanranger

The big question is why can't you save for a deposit? Why have you not saved something for a deposit before now?
Do you fritter your money away on clothes, Starbucks, nights out, holidays, gadgets, new phones, Sky TV?
Do you have any debts, including student loans?
Where will your legal fees come from?
Where will the money come from to furnish the property?

Running_Horse

burnsy89 wrote: »

Basically, i'm a first time buyer

At the risk of sounding unkind, no you're not.

When you have cleared your debts, saved a deposit and have a mortgage in place, then you can call yoursefl a first time buyer. Until then you're a saver.

The credit crunch happened for a reason, and if it was that easy everybody would be doing it.

googler

burnsy89 wrote: »

..... so if 4 years down the line I have £20k equity on the property, the investor will get their capital back and a profit of about £3k.

What happens if prices go down over the next few years, in the same way that they've been going down for the last two or three....?

Where will that leave you?

DVardysShadow

googler wrote: »

What happens if prices go down over the next few years, in the same way that they've been going down for the last two or three....?

Where will that leave you?

Sitting pretty, 'cos the Investor carries the risk.

... Oh wait .... Investors don't like carrying risks do they?

mjdh1957

I'm wondering how you'd go about finding this mythical investor who wants the chance of making less money than he could earn by putting his money in a bank.

When house prices were rocketing this might have made some sense. But in a falling market there will be no capital gains at all, and the risk of large capital losses.

It's a safer bet on Red in roulette....