Budget 2013 live....

ukcarper

chewmylegoff wrote: »

We're both wrong - but I am less wrong.

It is an annual fee - but it is the percentage at which that annual fee is charged which increases in line with rpi.

Y6 = 1.75%
Y7 = 1.75% * (1+RPI) so it rpi is 4% the annual charge is 1.75% * 1.05 = 1.873%

Etc

http://www.homebuy.co.uk/pdfs/FirstBuy%20Buyers%20Guide%20040811.pdf

Page 13 explains

That's a good link looks like you have to pay fee every year and its RPI + 1 so on a £40k loan £600 rising every year no compond interest as you have to pay it.

I'm off to bed read link later

armour

It seems you're right, Chewmylegoff.

As well as the benefit of an interest free loan of £40K for 5 years, you get a fixed(ish) low rate on the £40K for the next 5 years!

I imagine it could be very beneficial to have the option to have a £40K loan 5-10 yrs hence fixed at 1.75% (+RPI +1% anually)

The way this government is stoking inflation I reckon 5-10 yrs down the line that could be a great rate.

Or am I missing something?

PaulF81

If you pay it off in 5 years do you incur a fee? Thinking of starting a business and this 20% works out much cheaper than a business loan.

Graham_Devon

PaulF81 wrote: »

If you pay it off in 5 years do you incur a fee? Thinking of starting a business and this 20% works out much cheaper than a business loan.

You wouldn't be able to use it for this would you?

It will be linked to a mortgage product, like firstbuy and newbuy was. You had to take a sepcific newbuy mortgage to qualify.

ukcarper

That clears it up it is share equity you will owe 20% of the future value of house (that applies if value falls)

The fee is 1.5% in year 6 and that increases by RPI + 1% each year (that's is the 1.5% increases by RPI + 1%( ie with 5% RPI the fee increases to 1.86% then 1.97% and so on). This fee will have to be paid and not rolled over.

You can repay at any time but the minimum about you can pay is 10% of the value of the house.

Seems a good deal even taking into account if RPI was 5% every year fee would be about 5.6% in the final year. But to get real benefit you would need to make an efort to repay early.

PaulF81

Graham_Devon wrote: »

You wouldn't be able to use it for this would you?

It will be linked to a mortgage product, like firstbuy and newbuy was. You had to take a sepcific newbuy mortgage to qualify.

But if I sell my house and withdraw my 200k in equity I could?

ukcarper

PaulF81 wrote: »

But if I sell my house and withdraw my 200k in equity I could?

Bit of a gamble as that 20% is linked to HPI plus the fees involved in selling and buying also lots of strings.

the_flying_pig

has anyone found anything in any of the four UK broadsheets [which cover all points on the political spectrum fairly comprehensively] suggesting that creating this new suprime is a good idea?

ILW

the_flying_pig wrote: »

has anyone found anything in any of the four UK broadsheets [which cover all points on the political spectrum fairly comprehensively] suggesting that creating this new suprime is a good idea?

Why is it sub prime? I believe the same affordability criteria will apply, it is just the deposit this is involved with.

the_flying_pig

ILW wrote: »

Why is it sub prime? I believe the same affordability criteria will apply, it is just the deposit this is involved with.

i can't say i'm too tempted by that particular semantics debate.

my substantive question was that i'd been looking for someone credible who thinks that this is a good idea.