Help to Buy - Part Deux?

darkvader

So we have been eagerly waiting to get more details on the govts second go at the Help to Buy scheme aimed at existing homes and second time buyers.

The information provided so far is
1. Buyers need to only provide a 5% deposit
2. Govt guarantees 15% of the loan
3. Banks pay 0.9% to join this scheme for the govt to guarantee 15% of the loan in case of any default

What isnt clear is what the 'guarantee' is about
1. Is this similar to the first scheme, where buyers put 5% and the govt puts in 15% on top - so the actual mortgage is only 80%?
2. Or is this only a guarantee if the buyer defaults which means as the actual buyer I will be taking a 95% mortgage at around 5% interest? If thats the case then its pretty crap!!!!

DV

Gordon_Hose

I spoke to a IFA last week who seemed to assume it was similar to HTB part 1, where the buyer provides a 5% deposit and the government provide a 20% "loan" interest free for 5 years, after that you pay "1.25% interest" (his words).

When I mentioned that I had read, from numerous sources, that it was a 95% mortgage with the government insuring part of the loan, he was adamant that it wasn't going to be like that.

He confused me even more. HTB 2 has been a complete farce so far, even the banks signed up to it can't give any information yet.

maas

i think its point 2

the guarantee is from the government to banks in case of default,
and for this provision the interest rate and the requirements will be higher

Gordon_Hose

Which isn't really helpful at all?

maas

natwest have already said they are checking to ensure customers can afford 7% interest payments before approving any of these mortgages which are priced around 5% mark.

I think if you earn a lot of money relative to the house you want to purchase, have a squeaky clean credit record but simply dont have the 10% deposit then this scheme will work for you. But if you're on the breadline of affordability then you wont get it.

i think much of the stampede of people running to the banks after work for details and going to be disappointed!

darkvader

maas wrote: »

natwest have already said they are checking to ensure customers can afford 7% interest payments before approving any of these mortgages which are priced around 5% mark.

I think if you earn a lot of money relative to the house you want to purchase, have a squeaky clean credit record but simply dont have the 10% deposit then this scheme will work for you. But if you're on the breadline of affordability then you wont get it.

i think much of the stampede of people running to the banks after work for details and going to be disappointed!

I heard that too - so checking if you can afford a 7% rate on a 95% mortgage - and not including the 15% govt guarantee to make it a superficial 80% mortgage.

I dont mind if its similar to the first scheme where this 15% gurantee is discounted from my mortgage....

DV

Gordon_Hose

Just spoke to my IFA and he said it's banks making 95% mortgages available. Natwest confirmed to him their rate is 4.99%.

For me that would mean a £900pm mortgage payment.

No thanks.

andrewmp

Gordon_Hose wrote: »

Just spoke to my IFA and he said it's banks making 95% mortgages available. Natwest confirmed to him their rate is 4.99%.

For me that would mean a £900pm mortgage payment.

No thanks.

If you can't afford that, can youafford a mortgage? Rates can/will go up one day. 4.99% is historically low. They might have done you a favour.

Gordon_Hose

andrewmp wrote: »

If you can't afford that, can youafford a mortgage? Rates can/will go up one day. 4.99% is historically low. They might have done you a favour.

Where did I say I was proceeding with an application?

Chill out, I was merely exploring my options, and seeing as today is the first real day any official info was released about HTB2 I've not been able to explore my options fully until now.

As it stands I have £10k saved, so I'll carry on saving and leave HTB2 well alone.

The unfortunate thing is I live in an expensive area to buy.

andrewmp

Gordon_Hose wrote: »

Where did I say I was proceeding with an application?

Chill out, I was merely exploring my options, and seeing as today is the first real day any official info was released about HTB2 I've not been able to explore my options fully until now.

As it stands I have £10k saved, so I'll carry on saving and leave HTB2 well alone.

The unfortunate thing is I live in an expensive area to buy.

I'm chilled, didn't mean offence. It's just worries me when 5% is seen as high, if/when rates rise people could be in a mess.

darkvader

Same here - I dont see the point of this scheme - to get the 95% mortgage you need a squeaky clean credit file anyway. Might as well save up 10% and go for 90% mortgages - there is absolutely NO difference or advantage other than introducing 95% mortgages back into the market

I'd rather pay a premium and get a new build property by taking out a 65% mortgage (with the govt paying 20% and me paying 15%) on 2.5%

Why should anyone pay 5% for 95% mortgages instead of taking a new build and paying 2.5% for 75% mortgages - the money saved by not paying the extra interest rates itself can be used to pay the govt off!

DV