Help to buy schemes - very confused

Harry_T

Hi and I hope you can help to put me straight.

I'm 29, living at home (no rent/bills) and looking to purchase (FTB) within about a year - likely in 2014. I earn around 25k and have built a good deposit of around 55k. I'm therefore looking at houses for around 160 ish.

I keep reading about these new government schemes but can't find exactly the information I require.

I understand there is a Help to Buy Equity Loan but this is not what I want because I'm not looking at new builds.

There is also 'Shared Ownership' schemes - for some reason I don't like the sound of these. Are they any good for my situation?

I understand there is a Help to Buy Mortgage Guarantee but can't find that much information on this - set to come in the new year which may be good timing.


My question is (although the details are not yet known) are these a good idea or generally best avoided if you don't have to if you already have a good deposit?

I find them very confusing. It is essentially just a loan isn't it but are they better than a full mortgage?

Thank you.

okborednow

Both of the help to buy schemes are designed to help buyers who can't afford to save a large deposit get on the housing ladder. As far as I know the maximum deposit you can have to take advantage of these schemes is 10%. If you bought a house at 160k with a 55k deposit you'd have more than 30% equity so you'd be considered to not require help as you should be able to get a good mortgage rate already. Is there some reason you feel you need these schemes as based on the info you gave it seems you can afford the homes you're interested in fine.

Harry_T

Thanks - I've never considered them before but I've read a few people on here discussing them on various house prices.

I think I read it was up to 20% and I guess the reason I ask is to try and run the numbers on if that loan is cheaper than a mortgage etc - just hoping someone has been in or might be in a similar situation who would know if it's a good idea or not.

For example if I want to house that is 150k and I have a 50k deposit that is 100k mortgage over 25 years.

If I wanted a house that was 150k with a 7.5k deposit and say 15k (or 30k whatever the limit is) from the Help to Buy scheme how does that work out over the full 25 years. I presume the LTV is not as good and therefore you don't get as good rates but I presume you can overpay.

Just looking at options to see if these things are worthwhile.

Thank you.

dimbo61

The big question Harry is where do you live and what type of property do you want to buy?
Well done on saving £55K while only earning £25K a year and remember to say THANK YOU to mum and Dad when you do move out.
No rent or Bills !!!!!
Now if you are buying a small property ( go for a house rather than a flat if you can ) you need to factor in all the bills that Mum and Dad pay on their house.
Council Tax ( even 75% single person) will be the largest after the mortgage.
As for the mortgage most lenders will lend 4X your income so £100K or so.
Check out the cost of Gas,electric,water, broadband etc at home to give you an idea of what you will be paying when you move into your own home ( Unless Mum and Dad live in a BIG house!)
I like modern houses up to 10/15 years old because they are cheaper to run/maintain

dimbo61

£55K on a £150K property is nearly 40% so you should get the best rates on the market.
maybe put down 25% deposit and have an offset mortgage to put the rest of your savings.
Consider 5 year fix for security and look at YBS friends and family mortgage.
Only my views and I do not work for YBS but we do have an offset mortgage with them
Good Luck.
better to buy a property the old fashioned way

Harry_T

Thanks - I'm unfamiliar with offset and have never really read much in to them. Do you think that's a good route to go down then? I really know very little about them - what's the general benefit?

Yes it's been good not to pay any bills - very lucky on that front and certainly helped to build a deposit.