NewBuy Mortgage Scheme

MSE_Helen_S

Hi!

This is the discussion thread for the

NewBuy mortgage scheme.

Click reply below to discuss. If you haven’t already, join the forum to reply. If you aren’t sure how it all works, read our New to Forum? Intro Guide.


Thanks folks,

MJBweb

Hi,

Myself and my partner are both FTB looking into buying a new build house up to 160k (40k combined salary, no credit cards or loans outstanding or adverse credit history)have been saving for a year now and have put together 15k and with another will have at least 25k to act as a deposit/contents purchases etc (minimum saving of 1k a month)

Recently the government launched the new buy scheme and I was just looking for people's honest opinions of the scheme. To me it just seems it will be a way to get cheaper repayments for awhile. I have done some reading on other forums and most believe it better just go in with a full repayment mortgage which we can afford to do but where just looking into more opinions on what people thought would be the best option for us?

Due to see an mortgage advisor soon just wanted some more information before we went.

Thanks

brit1234

Its just a scheme to help builders keep new build prices artificially over inflated. In effect Subprime lending for the smallest size new builds in Europe, with cheap materials, no character yet the highest costs.

Due to being overpriced and buying with 5% deposit your effectively in instant negative equity. After 5 years you have to pay back the equity loan when your in likely negative equity and interest rates could be higher.

In reality it is a con/kickback to the big builders who fund both the Tory and Labour party millions of pounds who in return give them back hundreds in millions back in tax payers money.



Apart from the builders and government no one recommends the scheme at all, most slate it.

kingstreet

It is a 95% repayment mortgage and there is no equity loan.

This is NewBuy, not Help To Buy.

... and the articles are about HTB-MG which doesn't launch until January 2014.

brit1234

Whether it was 2008s Shared Equity, New buy, First buy, Home buy, Key buy, Help to buy or what ever the failed scheme has been re-branded this time it is for the builders benefit not first time buyer.

All of them allow the buyer to borrow far higher amounts than normal and really subprime lending.

MJBweb

So after reading a few of the websites above its probably better to say use the deposit and get a 90% mortgage instead of the scheme, better in the long run. Would you agree?

leveller2911

MJBweb wrote: »

So after reading a few of the
websites above its probably better to say use the deposit and get a 90% mortgage
instead of the scheme, better in the long run. Would you agree?

Yes.........simple as that.

All of the schemes that have been developed have one aim and that is to stop any house price correction.The Government want to kick start the economy and making people "believe" they can own a house is one of the objectives.If people "believe" they can afford a house they will feel positive and go out and spend theire money on the house, buy on credit etc.

A house price correction will cause any Government a lot of grief and they will do all they can to avoid it and if that means the taxpayer will act as a guarantor for mortgages then that shows you how desperate they are.

House prices in my area have risen around 125% in 10 years, wages have risen around 10%.

leereni

I have been accepted on buying a new home through the newbuy scheme and believe although the prices of newbuilds are overinflated, however there is a legitimate demand for this scheme due to deposit requirements. I appreciate people dont want to go back to 125% 0% mortgages. However, if you do the maths and look at getting a 10-20% deposit together compared with 5% then it would take you maybe 1-5 years longer paying rent.

FTB are pushed into a corner. Throw money away paying for rent in a sub standard home or buy a new home which you can almost do with as you please and in the long term will catch up and more.

I'm not saying this scheme is ideal, but you've got to look at your present situation and way up the additional newbuild price compared with older properties, and how much extra you'll spend on rent.