Is First but really that bad?

scooby75

I've come across a few posts on here from people interested in new build / first buy etc schemes, and it seems there is almost a militant group on here intent to put people off by refusing to even discuss any pros and cons of such schemes.

Looking to move out of my social accomodation myself, I'm in the situation of either renting privately or applying for one of these schemes.

I've nto done all my sums yet, but there is one thing about these new(ish) schemes. You get at least something for it.

If I chose to rent privately for X amount of time, I'll have nothing to show for it at the end. If I went for shared equity however, then at least there is something that money has gone to.

Put it this way with my example. I have a ready deposit of £5000. I can afford a maximum each month of £600 to pay for rent / mortgage etc. But try getting something with that - either I don't earn enough to afford that (I can afford it) even if it is more than the required monthly payments, or my deposit isn't enough. I can easily rent and pay a fortune with nothing to show, or I could put it to something that I would eventually (part) own - even if it is comparatively expensive. Yet despite being able to demonstrate that I could not get a mortgage, apparently i cannot get a firstbuy home either.

jamie11

Put it this way with my example. I have a ready deposit of £5000. I can afford a maximum each month of £600 to pay for rent / mortgage etc. But try getting something with that - either I don't earn enough to afford that (I can afford it) even if it is more than the required monthly payments, or my deposit isn't enough. I can easily rent and pay a fortune with nothing to show, or I could put it to something that I would eventually (part) own - even if it is comparatively expensive. Yet despite being able to demonstrate that I could not get a mortgage, apparently i cannot get a firstbuy home either.

I think that your £5000/600 availability is far too tight for you to be thinking of buying even a part equity property, don't forget you will still be renting the other portion of the property which in itself will gain value (maybe). You will then be in the position of having to buy that portion eventually for a far higher price than it is worth today.

TrickyDicky101

You don't fall into negative equity when renting either

brit1234

The reason that a lot of us are militant about Firstbuy, shared equity/ownership is we have done the maths and seen the effects from members here and else where. We just want to warn you about the bad side and protect you from a loss, after all this is a money saving website. I come from a civil engineering and building background and have actually worked on shared ownership properties. I saw the difference in materials and workmanship put in compared to the other properties on the development (Berkshire area, various builders). I even considered both shared equity/ownership and sat down with various sellers to discuss them. However at the end of the day the maths did not work out and I could see the pit falls. With shared ownership I could see they had an agenda to put all the risk onto the buyer, they didn't like my stratergy to minimise the risk. They wanted me to stair case as much as possible quickly. I wanted to get get my percentage of the property and pay off the mortgage faster on that rather than staircase putting more of the risk onto them if prices fell.

Simply doing the maths, seeing the problems and witnessing the nightmare stories here and elsewhere put me off completely. They are sub prime schemes designed to keep prices artificiality inflated, with smaller dimensions and cheaper materials. They only benefit the builders.

Next year you will see a rapid rise in distress stories on shared equity properties as the loan parts become payable. The government has stopped funding shared ownership/equity properties as well.

Newbuy will lead to negative equity. Do your maths and read about all aspects bad or good so you can make an informed decision. I my self avoided them and saved a good deposit over the years and now have close to £60k, it can be done. People say renting is throwing money away but I say I would rather the landlord take the negative equity rather than me. House prices are falling in general with the London bubble about to burst. It is better to save and position yourself for the best time to buy rather than buy now and come unstuck later.