MSE News: Budget 2013: Help to Buy mortgage scheme to launch

harpoboy

I really dont think this is a good scheme.

Unscrupolous folks will claim to have split from their partner, and need to use the scheme to buy a new home.

You can then put down 5%, use the scheme to get up to £120k interest free, and obtain a 75% residential mortgage.

Then declare the smaller flat your PPR, and move into the flat for a few days / weeks before there is a wonderful reconciliation and move back to the marital home.

Net benefit:super low residential mortgage rate, interest free £120k loan for 5 years, and CGT benefits (as the BTL property will be deemed your PPR for the final three years of ownership)

I really feel very uncomfortable with this scheme.

mickael28

kingstreet wrote: »

You repay the percentage of the current value you borrowed at the purchase.

If you borrowed 20%, you repay 20%, whether high, or lower, at the time.

Sorry, kingstreet, I didn't fully understand the last sentence. Just to make sure I understood, did you mean that 'whether high or lower at the time of paying the money back doesn't matter, you always repay the 20% you initially borrowed?

If that's the case, do you know if the normal shared ownership scheme, where the amount you need to repay depends on the actual valuation of the house at the time of repaying the loan, will still be available from April? or will Help-to-Buy replace the other scheme?

leereni

It's not clear what needs to be paid back. 20% of the original price or 20% of the value of the property after 5 years.

I'd say if its the first it sounds like a good deal as its effectively a 5 year interest free lump sum. But I get the feeling it's the second.

Any thoughts?

kingstreet

Let me state this, once again, very clearly.

You pay back the original percentage you borrowed, not the original cash value.

Therefore, if your original loan was 20%, you would only pay back the same cash amount if the property value was exactly the same as the original purchase price.

If the value of the property has fallen at the point you repay the loan, you repay 20% of that value, less than your original cash loan amount.

If the value of the property has increased at the point you repay the loan, you repay 20% of that value, more than your original cash loan amount.

mickael - you are confusing shared ownership with shared equity. This is shared equity. This will probably replace Firstbuy, the current shared equity scheme, as the two are practically identical. It may be retained, if the Government wishes to retain the maximum income features it contains, perhaps for certain key occupations. Shared ownership will continue as it is, known now, as it is as HomeBuy.

Use this for guidance, for the time being;-

http://www.firstbuyscheme.org.uk/firstbuy.php

Hopelessly_Hopeful

kingstreet wrote: »

Let me state this, once again, very clearly.

You pay back the original percentage you borrowed, not the original cash value.

Therefore, if your original loan was 20%, you would only pay back the same cash amount if the property value was exactly the same as the original purchase price.

If the value of the property has fallen at the point you repay the loan, you repay 20% of that value, less than your original cash loan amount.

If the value of the property has increased at the point you repay the loan, you repay 20% of that value, more than your original cash loan amount.

mickael - you are confusing shared ownership with shared equity. This is shared equity. This will probably replace Firstbuy, the current shared equity scheme, as the two are practically identical. It may be retained, if the Government wishes to retain the maximum income features it contains, perhaps for certain key occupations. Shared ownership will continue as it is, known now, as it is as HomeBuy.

That's really helpful explanation thank you

HHx

kingstreet

Not aimed at you, HH, but in general.

Post numbers #99, #104, #136 and #141 all set out the terms, including the link to FirstBuy, in one case.

If I appear irritated, it's because I'm repeating myself over and over and the whole thread is not being read before people post the same questions.

samba12

Any idea what impact the Mortgage Guarantee Scheme will have on properties in London valued just under and just over 600k?

Are we likely to find that those just under 600k will benefit from a rise in value whilst those just over 600k are in less demand so remain static/fall?

josey1964

Trying to get my head round this scheme.

We are on the market and my be tempted by a new build.

We are looking at a property at £180,000. We should make £80,000 from the sale of our home, we have savings of £50,000, so only need a mortgage of £50,000.

Will we qualify for the loan as we have over the 20% deposit or not.

Sollytear

josey1964 wrote: »

Trying to get my head round this scheme.

We are on the market and my be tempted by a new build.

We are looking at a property at £180,000. We should make £80,000 from the sale of our home, we have savings of £50,000, so only need a mortgage of £50,000.

Will we qualify for the loan as we have over the 20% deposit or not.

Doubt it

persa

josey1964 wrote: »

Trying to get my head round this scheme.

We are on the market and my be tempted by a new build.

We are looking at a property at £180,000. We should make £80,000 from the sale of our home, we have savings of £50,000, so only need a mortgage of £50,000.

Will we qualify for the loan as we have over the 20% deposit or not.

You can't put down a deposit of more than 20%.