Ticking time-bomb ?

schoey123

Hi All,

What is your opinion on all these new ways of buying property ? First buy, rent to home buy, shared ownership etc etc.

To me it's a ticking time bomb, if you cant afford to buy a property now why sign up to something that is effectively defering a payment to a point in the future.

I worry that people dont really understand what they are signing up to and get sucked in by the opening offer without consideration of the deferred payment in the future.

brit1234

There are a fair few of us on MSE warning people about these dodgy schemes.

For me the biggest time bomb is shared equity schemes where people take out not only a mortgage but an equity loan on an overpriced newbuild. The equity loan is repaid after 5-10 years. These properties are put almost straight away into negative equity so face real dangers when you have to remortgage and more importantly have to start paying back the equity loan. The first equity loans start needing to be repaid in 2013 so expect to here lots of horror stories then.

kingstreet

To be fair brit, the equity loans start to attract payment of interest at the points you mention, they don't become repayable until the property is sold.

Not disagreeing with the sentiment by the way. Merely clarifying the detail.

wymondham

Indeed. When builders are faced with books full of properties that they can't sell, along comes a scheme to 'help' the buyer... how thoughtful!

kingstreet

wymondham wrote: »

Indeed. When builders are faced with books full of properties that they can't sell, along comes a scheme to 'help' the buyer... how thoughtful!

I think assistance for the construction industry is the main intention of Government policy here. Helping the buyer is merely a useful by-product.

Thrugelmir

Better that individuals build equity by paying a mortgage. Rather than rent for pertuaty.

Given that many are going to work until an old age. The payment of a mortgage over an extended period shouldn't be a great concern.