Help To Buy - Advice please

theheadshrinker

Hi,

I'm currently considering taking out a Help To Buy mortgage.

I have spoken to our Local Homebuy Agent and have run the figures by them over the phone and they said that there is no reason why we wouldn't be accepted.

The best rates that I have found so far are from Nationwide, has anybody found any other lenders with better rates?????

Nationwide
2Y @ 2.54% +£999 fee
2Y @ 2.94% (No fee)
3Y @ 2.64% +£999 fee
(There are better rates for existing customers and lower fees for FTB's)

I know that it will depend on individual circumstances, but generally does anybody know if Nationwide would loan as much as Halifax or Natwest.

Also, is there there any sort of cap on the rates that lenders can charge as I suspect in say 10-15 years time there won't be many lenders offering these mortgages and I could be left with no option but to pay an inflated rate??

Does anybody else have any concerns that they could share about this scheme as I don't want to make an expensive wrong decision!!!

Any help would be gratfully received.

kingstreet

If the PP is between 125 and 250, you may be better off with the Halifax stamp duty incentive products instead. It's horses for courses.

No, there is no cap. You will normally roll onto the lender's standard variable rate when any initial deal ends and these are the same for Nationwide, Halifax, NatWest etc.

In terms of income multiples, they are all about the same, but watch out as you have to key 3% of the equity loan as a commitment with Nationwide and this will reduce the amount you can borrow.

amnblog

The Local Homebuy Agent will ask you to see a mortgage broker or IFA in any case. That adviser will advise you according to your own circumstances.

theheadshrinker

Kingstreet - Thank you for your reply.

The PP is above £250,000 so as far as I can see, Nationwide would be my best option.

Do you know if there are any others lenders that offer rates close to Nationwide? The next best that I have found is Natwest - 2Y @ 3.15% or 5Y @ 3.59% both without fees. I have an appointment with Nationwide on Monday but I would like to have another option in mind as a backup.

Would you expect there to be competitive HTB mortgage rates in 10-15 year's time? I am concerned that there will be very few lenders offering HTB mortgages leaving me with little choice but to pay a high SVR.

Are there any other downsides to this scheme that you could draw to my attention to save me from making a costly mistake?

Many thanks

kingstreet

You just have to watch out for the repayment of the equity loan - 20% of the property value at the time of repayment and that you don't pay it off monthly, only by lump sums at end of term, voluntarily, or on sale of property.

Main "rate competetive" lenders NatWest, Woolwich, Nationwide, Halifax.

Would you expect there to be competitive HTB mortgage rates in 10-15 year's time?

No way of knowing.

jamesml

Whats to stop you saving up to pay off the loan element and then switching to a 'standard' mortgage instead? Then it doesn't matter if there are HTB mortgages around in x years?

Appreciate saving up to pay off 20% is no mean feat, but its an option? In 10-15 years will you not have moved house anyway, and therefore had to repay the loan?

brit1234

What you want to watch out for is when you buy a new build you pay extra, a so called new build premium. So as soon as you buy it it drops in value as not new. That doesn't matter with a 25% deposit as you will still have equity but with a 5% deposit it could wipe out your equity or even leave you in negative equity.

With out the equity remortgaging may be a problem leaving you on the SVR. At some point interest rates will rise, QE and Funding for lending will stop. At that point mortgage rates will shoot up and house prices go down. So you have to have room to pay more interest in the future. You also have to be prepared to pay extra for the loan in 5 years on top.

If there is a change in government they may not support the scheme also. Mortgages for the scheme in the future are a complete unknown and you have to be prepared for them not existing and trapped on the SVR unless you repay the loan.

Its a risk you have to be happy with, I personally wouldn't do it and save a deposit. In my eyes it is a scam for the builders benefits only and the vast majority of commentators have criticized the scheme.