Barratts dream start help desperately needed - we may be forced to sell our home

Idiophreak

AMILLIONDOLLARS wrote: »

Just been reading this post and came across these article written in 2008, seems their predictions have come true!

Their "predictions" have come true, in part, for some people.

If they'd predicted "some people will enter into a contract, blindly ignore any responsibility they agree to and then moan about it in 10 years time", I think they'd have been spot on.

Personally, I bought on SE in May 2009 and sold five years later for a good profit, allowing me to put a decent deposit down on a new home. Their "predictions" definitely aren't coming true for everyone.

thisismoney wrote:

The dangers of such deals is their inflexibility. Mortgage expert Melanie Bien of broker Savills Private Finance in London says that for young families to meet their mortgage payments and save a quarter of their home's value in ten years is a tall order

..except there's never been a requirement to actually save 25%...You've only ever had to save 10%, enough to remortgage for the remainder. Given that most people will pay lower mortgage than the equivalent rental, if they can't save a 10% deposit in 10 years (especially considering they'll have paid roughly 10% of their outstanding mortgage by that time, anyway), maybe home ownership just isn't for them.

thisismoney wrote:

There are also uncertainties over how builders would act if homeowners could not afford to repay them at the end of the agreed period. Bien says: 'If you can't afford to repay the loan, you may have to sell the property.'

I disagree this equates to uncertainty. When I took out my shared equity deal, I was quite certain that 'If you can't afford to repay the loan, you may have to sell the property.' (and, by the way, be lumbered with a chunk of any negative equity).

Of course, whoever wrote the article had no apparent understanding of the difference between shared equity and shared ownership, so I shouldn't be surprised that it's littered with inaccuracies.

Idiophreak

AesopsAnt wrote: »

I think that the 25% equity scheme could have worked for people though, had they started saving to repay it on top of their mortgages on day one (although for a repayment of £40k, saving £330 per month, every month for 10 years may be a tall order). I guess the truth is really that there's no getting out of saving for a deposit if you want to be a home owner, whether you save it before buying, in the years after you've bought, or even if you unfortunately end up back at square one having lost your house. It might have been a better idea for Barratt et al to insist on some sort of repayment vehicle instead of just leaving the strategy entirely to the buyer, but that obviously would have looked a lot less attractive.

The thing is, as with any house purchase, it's all about when you buy. Those that bought at the peak will be stuck with negative equity, those who buy in a trough will make some money. Whether you use shared equity or not really doesn't impact on that.

Most of the issues people are having with Dreamstart et al are because dodgy salesmen told people "house prices always go up!" and a bunch of gullible people took that as gospel.

Sadly, you can't hold everyone's hands all of the time. If your house price starts falling and you know you're going to have to pay back a loan, maybe you step up and start saving a bit. If house prices are soaring and you can easily afford it, you're probably OK to spend the money on a big TV, or other cool stuff.

Thrugelmir

Idiophreak wrote: »

The thing is, as with any house purchase, it's all about when you buy. Those that bought at the peak will be stuck with negative equity,

We've had record low interest rates. So most people have had the opportunity to address this over the past 5/7 years if they wished to. However small overpayments are in relation to the mortgage owed. Overtime they do build up. The real problem I suspect is those who took out interest only mortgages and for whatever reason over stretched themselves financially.

AesopsAnt

Idiophreak, of course you're right about the importance of buying at the right time, but I don't think the majority of people can predict the market with much accuracy. I'm glad it worked out for you, but unlike the person I was looking for advice for, you clearly had a plan and had done the calculations before buying.

It's not just the dodgy dreamstart salesmen peddling the myth that house prices only ever go up - I've lost count of the number of friends/neighbours/family members that told my husband and I that we needed to "get on the ladder" without any reference to the state of the housing market at the time.

TBagpuss

elizabethdane wrote: »

We have a combined income of 46k but we've always been on a repayment mortgage and now have a son, so there's been no money left to save. We had no idea that this could happen and are now facing a life of paying somebody else's mortgage for them. I am devastated. Has anybody got absolutely any suggestion at all for how we should proceed? Any advice is greatly appreciated. There must be many, many people in this position.

Many thanks. Vic.

I think these are the points you need to look at. I'd suggest that you look at some of the debt-related boards for guidance.

Sit down and work out your current outgoings, and then look at where you can make savings. This should include working out whether overpaying the mortgage is the most efficient way to save, or whether you would do better to put that money into an ISA, for instance.

From what you say, you have 2 years to try to sort out your situation. It may well be that if you can, at the end of the 10 years, make a partial payment that they will be more open to you deferring the balance. Equally, if you can save enough to get out of negative equity then you may get to a point where remortgaging is an option.

As we ll as looking at how you can make savings, also look at ways of maximising your income - are you entitled to any Tax Credits, child care vouchers etc? Can either of you increase your hours or try to get a second job?

David_Aston

Kind words TBagpuss, but did you notice the op is from Feb 2013!

Cheeky_smiler

I'm in my last 6 months of Barrett's dream start programme.
I've sent two valuations and have worked out my 25% of the market value and have my money ready to pay Barrett's back. No problem you say oh yes ... Barrett's are refusing the valuation on the grounds it's low and want me to pay out for a surveyor. Ok I hear you say pay the £250 ... But if the surveyors valuation is still low they will refuse that too!!!
It's amazing I've saved virtually £30,000. Which they can have within the week .... In the grand scheme if things I e lost £32,500 of equity in my property and Barrett's? They will have lost £ 8,000 on the loan . I was told at the start it was a case of Russian roulette as to house prices over ten years but it seems Barrett's will not accept anything except more than what they loaned. Amazing how you can't pay your loan back Barrett's just move the goal posts ...

cavework

are there any Barretts NEW builds of the same or similar design in the same area coming onto the market?
What is the asking price for these?
I'm just wondering if these are priced lower for a brand new property it might give you some ammunition with regards to their valuation of your home.
Sorry if this is a daft idea

GwylimT

One of my brothers did this, but as be realised he would unlikely to be able to increase his mortgage by £30k so instead of over paying his mortgage he saved every penny for five years so when the time came he could pay off. If he had a brain he would have saved for that long and avoided a dreaded barratt box like the plague.

I suggest doing an SOA, this way members on here can also help reduce outgoings. My brother after all managed this on a household income of £32k with two young children.

runicfire

Cheeky_smiler wrote: »

I'm in my last 6 months of Barrett's dream start programme.
I've sent two valuations and have worked out my 25% of the market value and have my money ready to pay Barrett's back. No problem you say oh yes ... Barrett's are refusing the valuation on the grounds it's low and want me to pay out for a surveyor. Ok I hear you say pay the £250 ... But if the surveyors valuation is still low they will refuse that too!!!
It's amazing I've saved virtually £30,000. Which they can have within the week .... In the grand scheme if things I e lost £32,500 of equity in my property and Barrett's? They will have lost £ 8,000 on the loan . I was told at the start it was a case of Russian roulette as to house prices over ten years but it seems Barrett's will not accept anything except more than what they loaned. Amazing how you can't pay your loan back Barrett's just move the goal posts ...

We're now into the last 3 years or thereabouts of the scheme. Started to look at trying to move house as we've overpaid the mortgage, and saved up about £12K, however the Estate Agent now valued the house at £30-35K less that what we paid 7 years ago.

Barratt called me the other day with a 'special offer', which was about £7K off what we owed them. When I explained that even with this discount, it still comes to a higher figure than 25% of it's current market value (hence not much of an offer!) they couldn't seem to get their head around the figures and persisted in trying to tell me that it's a good deal.....

So I sent them a letter asking for the same level of discount to be applied to the current market value, however they have so far failed to respond.

We could try and remortgage now to cover it (would take us back to around a 95% mortgage), but seems a bit daft when the loan is still interest free.

I'm going to persist in trying to get them to discount the amount based on the current market value. They still get a decent chunk and it would allow us to move.