newbuy pointless now ?

droiderm

After waiting 3 weeks for a decision in principle and finally getting a yes , it seems new buy due to the budget isn't a great idea.

The builder is already pushing help to buy .
It seems I would be in a much better negotiating position with help to buy
It also seems to advantageous to get a 20 percent interest free loan for 5 years , in addition to a potentially better rate .

It's just been a case of bad timing as I wasn't eligible for firstbuy

Do lenders actually lend on help to buy yet ? More so , do nationwide or does anyone know if and when they plan to ?

Due to my history in am likely stuck with nation wide. I am assuming if they said yes for a newbuy they will for help to buy ?

Seems like newbuy will be dead soon ?

kingstreet

We're "stacking" cases like mad at the moment. We put in a Newbuy DIP. If that fails. we drop down to HTB and the builders are happy, as it costs them less.

We have one development with estimated finish dates in October and the magical six months is within reach this month. We're going to have a big pile of cases all to be done in the space of a week.

As I've said on other threads, we're expecting the lenders currently offering FirstBuy to continue onto HTB, but so far only Halifax has actually signed up. Expect some Government pressure if there appears to be a bit of foot dragging...

droiderm

Sorry to be a pain, but I really need to get my head around what's the best to do, and what's achievable. I can't trust the broker, they are clearly working for the builder.

I just saw your response in the other thread, regarding the cost to builders of NewBuy, I do understand what your saying, but I could still argue that NewBuy still financially stacks up, but I guess it's a moot point.

I assume from your post that if I got a NewBuy DIP from Nationwide (with a historic BR and reposession) then it's likely that the HTB (if and when available) will be a bit looser on the criteria.

I can see from Nationwide's website that they do "Shared Equity Schemes". I can't see they name any, only rules for what they accept. I assume NW do FirstBuy?

If the builders prefer Help To Buy, it also has benefits for me. But, I need to understand the post 5 year situation. I will read up on that. I guess the only driver for me will be if NW do Help To Buy, and when they do it. Do you have a feel for any of those questions?

I just feel frustrated! After waiting over 3 weeks for a decision, it feels like I have got something which the builders are beginning to shun away from, and I do understand why to some respect.

Thanks again for your help.

kingstreet

I'd expect someone who passed on a Newbuy DIP to pass on an HTB DIP as it's likely to be a 75% application and the risk is reduced for the lender.

Here's Nationwide's current shared equity list;-

http://www.nationwide-intermediary.co.uk/lendingcriteria/schemes/equity_share_schemes

FWIW FirstBuy no longer exists. It was replaced by HTB on 1 April.

When the five years is up on HTB, you start to pay a "fee" which starts off at 1.75% of the loan amount, payable monthly. The cost of a £30,000 loan would be £43.75 in year six. In year seven, it goes up by RPI + 1%. If RPI is 6%, it goes up from 1.75% to 1.86% and the cost rises to £46.50. If RPI is again 6%, in year eight the rate is 1.97% and the cost, £49.25.

The loan is repaid from the sale proceeds whenever that happens, or at the end of the maximum 25 year term. If you had a 20% loan at the outset, you repay 20% of the current value at the time of repayment. You can repay it in chunks of 10% earlier using the "staircasing" method. You can read more about post-sales issues here as they will follow the FirstBuy/HBD system;-

http://www.myfirsthome.org.uk/content/1/119/firstbuy-fb.html

droiderm

Thanks again. Just been reading the link you posted on another shared equity thread to a Home Buy Agents website.

It's not nice an simple. It would definately be more appropriate if I knew I could cover the 20% in five years, but I most likely can't.

The kicker for me is, it's 20% of the current value even within 5 years. Your dealing with a moving target. Although being interest free has it's benefits, it's not that attractive.

Hmmmm. Nothing is ever simple.

kingstreet

Chances are there's a near 2% difference between the rate for a 95% mortgage and the rate for one at 75%. You need to factor-in the lower mortgage cost.

droiderm

Good point, just tried some figures...

£160000 purchase price, £152000 95% NewBuy mortgage @ 4.74% five year fixed = £875

160000 , 8k deposit, 32k equity loan, £120,000 mortgage assuming 3.29% = £592

Difference = £283 X 60 months = 16,980.

Which would just abover cover the 10% minimum stair case, assuming a reasonably interest rate and low house price movement.

I need to look forward at some point, how much the additional 10% would cost to service, over the time period I could get it together.