Help to Buy 2014

Dan:_4

brit1234 wrote: »

As a portential first time buyer I hope they scrap the scheme. Living in London all the foriegn buyers and stimulas schemes are pushing house prices out of reach of most. The 2nd part of H2B will make it even worse.

The chances of the scheme being scrapped is ZERO.

The idea is to encourage lenders to sell more attrative products within the 85-95% LTV range. You still need a deposit and a good credit score so it may not push prices up as much as you think.

sj239

Does anyone know when further details about the scheme will be released?

I am in a bit of an awkward situation having saved just enough to get to about 15%-20% deposit. Now the scheme is about to come out I am thinking of only putting in 10-5%% of my own money and taking the other 10-15%% from the Government. I can then stick the rest of the money I've saved in a savings account for 5 years and pay off the Govt. loan after 5 years. Obviously I would be losing out on some of the upside from the house price increases (if any) that I would have to share with the government but seems silly for me to put in all my own money when I can save some back and take the Governments for free....?


Am i missing something here?

Dan:_4

sj239 wrote: »

Does anyone know when further details about the scheme will be released?

I am in a bit of an awkward situation having saved just enough to get to about 15%-20% deposit. Now the scheme is about to come out I am thinking of only putting in 10-5%% of my own money and taking the other 10-15%% from the Government. I can then stick the rest of the money I've saved in a savings account for 5 years and pay off the Govt. loan after 5 years. Obviously I would be losing out on some of the upside from the house price increases (if any) that I would have to share with the government but seems silly for me to put in all my own money when I can save some back and take the Governments for free....?


Am i missing something here?

The scheme that is being introduced in Jan 14 does not involve a Government loan.

You will need to sort out the whole deposit yourself.

The idea is the lender can purchase a government guarantee, so if you default on the loan the taxpayer will take the hit - not the bank.

Hopefully, if this works the way it's intended, the rates you can borrow at high LTV will be lower than they are right now.

sj239

Dan: wrote: »

The scheme that is being introduced in Jan 14 does not involve a Government loan.

You will need to sort out the whole deposit yourself.

The idea is the lender can purchase a government guarantee, so if you default on the loan the taxpayer will take the hit - not the bank.

Hopefully, if this works the way it's intended, the rates you can borrow at high LTV will be lower than they are right now.

Understood. My point is that, under this scheme i should theoretically be able to get the same mortgage rate from the lender whether i put in either: 20% deposit myself (no Govt. guarantee), or 5% deposit myself since in the latter case the government would guarantee/input the remaining 15%? Is this correct?


If you already have the 20% wouldn't you just go for the second option every time? Sorry if I'm missing something here.

kingstreet

The rates will be similar to those for current NewBuy products as this is simply the NewBuy scheme re-branded.

It will typically be around 4.5% for a 95% mortgage.

Thrugelmir

sj239 wrote: »

Understood. My point is that, under this scheme i should theoretically be able to get the same mortgage rate from the lender whether i put in either: 20% deposit myself (no Govt. guarantee), or 5% deposit myself since in the latter case the government would guarantee/input the remaining 15%? Is this correct?

The "Guarantee" has to be paid for in some form. More than likely this will be built into the rate of interest charged.

EU134

my mortgage advisor told me not to get involved in it, so I'll take mortgage with what I've got.
and I hope to buy it before Jan2014 where lots of people with 7-8k in their pocket will want to buy. It will be another property bubble that in few years will be followed by bubble burst and prices will go down as lots of people won't be able to pay rates and banks will repossess their properties.

but it's just my opinion

mrginge

sj239 wrote: »

Understood. My point is that, under this scheme i should theoretically be able to get the same mortgage rate from the lender whether i put in either: 20% deposit myself (no Govt. guarantee), or 5% deposit myself since in the latter case the government would guarantee/input the remaining 15%? Is this correct?


If you already have the 20% wouldn't you just go for the second option every time? Sorry if I'm missing something here.

You do realise that under option 2 you are paying interest on the remaining 15% don't you? Its still a 95% ltv, so even if you invest that extra money somewhere else you need a net return better than your mortgage rate.
Plus of course the 'theoretical' same rate is not going to happen. There may be some small reduction in the 95% rate to account for the marginally reduced risk to the lender.

So under option 2 you have a higher rate across the whole of the loan, offset against a taxable investment.

Doesn't sound like a sensible option to me.

Thrugelmir

EU134 wrote: »

It will be another property bubble that in few years will be followed by bubble burst and prices will go down as lots of people won't be able to pay rates and banks will repossess their properties.

Many existing borrowers who over stretched themselves with large interest only mortgages during the credit boom are at the greatest risk of default. Lending criteria has significantly tightened down and repayment mortgages now in vogue. So newer borrowers at at far less risk, and will suffer less impact when rates eventually risk.

witchy1066

I suspect the lending criteria will be very high with a 95LTV
also it might effect the type of property they are willing to lend on ,originally we were looking at 95% but the lenders were so picky about the property being in tip top condition,
in the end we decided to leave it and put more deposit down

this is just my experience but want to make others aware that if deciding to use the scheme it may not all be as easy as they may think and if you can save more than the 95% you will have considerably more options