95% Mortage deals/Advice please

amen2630

Hi Martin

Some advice please would be most invaluable. As you are aware the new govt scheme of 95% mortgages meaning only 5% deposist for first time buyer However i'm reading through some of the deals being offered by banks/building societies they seem to come with hefty completion deals/interest rates. My ? really your views on this scheme? how to get the most benefits or should first time buyers wait and should FTB still wait and watch how the market will go.

Senior_Paper_Monitor

I think your question may be answered by this press release which has just popped up on my screen .....

Just 400 homes have been reserved through the government's NewBuy scheme in the nine weeks since its launch, according to the Home Builders Federation (HBF).


NewBuy is a government supported mortgage indemnity scheme, which allows buyers to secure their new-build home with a deposit of between 5 to 10%.

brit1234

Ftb should avoid newbuy as it will put you in instant negative equity, as well as the higher mortgage rates.

Better cutting back for a while and saving a 10% deposit as house prices fall.

ACG

Personally its not something i would do for a number of reasons:
1) It can be hard enough getting a mortgage as it is, having to jump through whatever hoops for this scheme just adds to the stress.
2) The rates available arnt that great, it could cost a lot more in the first few years until you get the LTV below 90% or even 85%.

However....

I can see the benefit of it though. It saves people spending dead money on rent, it gets people out on their own, not having to live parents.

I would disagree against it being a scam as brit1234 signature suggests. Its a facility to help people, its not there to ensure people who havnt saved up get a better deal than people who have.

The_J

ACG wrote: »

I would disagree against it being a scam as brit1234 signature suggests. Its a facility to help people, its not there to ensure people who havnt saved up get a better deal than people who have.

Nail. Head. Hit.

The negative equity claim is quite a big one as well. Firstly, that a property should lose that much value as soon as it stops being new. Especially at the discounts offered on new developments. Secondly, and more importantly, that someone who is buying a home should care about the loan to value as soon as they have moved in.

zappahey

ACG wrote: »

I would disagree against it being a scam as brit1234 signature suggests. Its a facility to help people, its not there to ensure people who havnt saved up get a better deal than people who have.

It's a means of making an unaffordable house affordable to people who can't afford a house, thus ensuring that houses remain unaffordable to those who could otherwise afford a house.

(c) The News Quiz

ACG

I disagree.

Rent is at a pretty much all time high.

If rent were lower, people could save up - but because people are in a rush to move out for whatever reason and demand is high landlords can charge more rent, meaning people end up saving less.

Once theyre in the property, the repayments are less than rent so they can afford to start saving up quicker.

zappahey

ACG wrote: »

I disagree.

Rent is at a pretty much all time high.

If rent were lower, people could save up - but because people are in a rush to move out for whatever reason and demand is high landlords can charge more rent, meaning people end up saving less.

Once theyre in the property, the repayments are less than rent so they can afford to start saving up quicker.

I suspect we're into a circular argument here. People can't afford to buy, so they have to rent and thus can't afford to buy...and round it goes.

ACG

I agree with that