Help to Buy (Mortgage Guarantee Scheme)

deano3

Hi,

If for example i wanted to purchase a property in January (when this scheme goes live), for 100k and i put down the 5% deposit of 5k, would i have to secure a mortgage for 95k or would the 15% goverment loan be included thus the mortage required being 80k?

Sorry if this matter has been discussed already, did have a search with no joy.

Thanks

phildamb

As far as I can see the government give 20% on top of your 5% so would only be a 75% mortgage. I'm not convinced on the whole scheme really seems like just another party involved in the debt and to artificially bump up house prices again..the lack of 95% mortgages is what should be addressed their is no lack of houses just a lack of mortgages, it will all lead to exactly the same problem again...boom and bust.

deano3

Thanks for your response, so for a 100k house a mortgage of 75k would be obtained from the mortgage provider, essentially increasing availability to more expensive housing.

For what its worth im going to reserve judgement about this scheme pending further details, just trying to understand the basic concept for now.

phildamb

deano3 wrote: »

Thanks for your response, so for a 100k house a mortgage of 75k would be obtained from the mortgage provider, essentially increasing availability to more expensive housing.

For what its worth im going to reserve judgement about this scheme pending further details, just trying to understand the basic concept for now.

I would be cautious of these schemes and maybe see about seeing a proper mortgage advisor that is seperate to the house builders...better to pay a little more that you can afford than to owe someone who may change later on or inhibit you from moving to a bigger house when you can afford it (by taking out a chunk of the present property.)

kingstreet

You're mixing two schemes which can't be mixed.

HTB Equity Loan is now available on newbuilds and you put down 5% deposit, get a second charge equity loan for upto 20% and a mortgage for as little as 75%.

This was launched on 1 April and it replaced FirstBuy.

HTB Mortgage Guarantee is the 5% deposit with indemnity scheme which will be launched on 1 January 2014 and this will be available on second hand properties and it will accompany Newbuy, which currently does the same on newbuilds.

deano3

So in respect of the example above, using the mortgage guarante scheme (2nd hand property), would the mortgage be for the 95% or 75%?

Building_Surveyor

you will have 75% mortgage. 5% from you, the other 20% from the builder/developer. - you will need to choose a lender who lends on this scheme though

Wi88le

95% I think for the example in op as it is only a guarantee if the mortgage is defaulted on.

However you look at it it's a 95% mortgage, the loan option being potentially worse unless you will have the means to pay it off in 5 years when it isn't interest free, 6 years wouldn't be so bad at 1.75% interest but after that its the 1.75 + rpi + 1% per annum which could get very expensive very quickly.

As for the guarantee scheme we still don't know what the government will charge the lenders for utilising this option

Building_Surveyor

mortgage guarantee scheme you can put 5% down up to max of 20%. to my knowledge there is no contribution from a third party.

as someone above suggested ive very skeptical about this guarantee scheme

kingstreet

Building_Surveyor wrote: »

you will have 75% mortgage. 5% from you, the other 20% from the builder/developer. - you will need to choose a lender who lends on this scheme though

You're mixing equity share with mortgage guarantee.

It is either one, or the other.

Mortgage guarantee = 1/1/2014 - 95% mortgage on second hand property

or

Mortgage guarantee = now - 95% mortgage on newbuild property (Newbuy)

or

Equity share = 1/4/2013 - 75% mortgage on newbuild with 5% deposit and upto 20% equity loan.

deano3

kingstreet wrote: »

You're mixing equity share with mortgage guarantee.

It is either one, or the other.

Mortgage guarantee = 1/1/2014 - 95% mortgage on second hand property

or

Mortgage guarantee = now - 95% mortgage on newbuild property (Newbuy)

or

Equity share = 1/4/2013 - 75% mortgage on newbuild with 5% deposit and upto 20% equity loan.

Forgive me for not grasping this, if i was to purchase in jan 2014 a second hand property with mortgage guarantee, i put down 5% and secure a 95% mortgage, where does 20% fit in with that?
are you saying the goverment takes 20% equity "just" for providing the guarantee and higher ltv?