Help to Buy is nothing but an election ploy....

ukcarper

blinko wrote: »

They can now borrow 95% of the value of a property.

The whole point of the new capital rules are so that the kind of reckless lending that caused 2008 can never happen again. Reducing risk for the banks, reducing risk for the tax payer and also reducing the risk of default for the purchaser.

Help to buy increases the risk for all involved

Only if their income is high enough how many it wasn't reckless lending in this country that caused 2008.

ukcarper

grizzly1911 wrote: »

They couldn't afford the earlier deposit requirements. So they can now borrow more than before the schemes.

They are potentially going to be paying a premium, in the case of new build, so the risk of negative equity is higher.

I wonder at what interest level the lending establishments assess affordability?

True but there are strict affordability rules in place.

Graham_Devon

ukcarper wrote: »

Individually people can't borrow more.


Apart from reduces risk to bank and tax payer the rest is debatable.

Borrowing more is the entire point.

Instead of having to save a larger deposit, they save less and borrow more.

ukcarper

Graham_Devon wrote: »

Borrowing more is the entire point.

Instead of having to save a larger deposit, they save less and borrow more.

They can't borrow more than affordability rules allow so the property they can buy will be a lower price than if they had a 20% deposit.

if some can borrow £100k with a 20% deposit they could afford a property of £125k with a 5% deposit they could afford £106K.

wotsthat

Graham_Devon wrote: »

Instead of having to save a larger deposit, they save less and borrow more.

What like 95%? Just like I did, my parents, you(?), your parents(?).

The little devils.

Graham_Devon

ukcarper wrote: »

They can't borrow more than affordability rules allow so the property they can buy will be a lower price than if they had a 20% deposit.

Still borrowing more, either way.

To suggest a scheme, whereby the entire point is to give easier access to higher loan to value ratios, doesn't allow people to borrow more is a bit naive.

The fact that you are comparing this scheme to people with a 20% deposit is frankly silly. The very point of using this scheme is precisely because you don't have those sorts of deposits.

ukcarper

Graham_Devon wrote: »

Still borrowing more, either way.

To suggest a scheme, whereby the entire point is to give easier access to higher loan to value ratios, doesn't allow people to borrow more is a bit naive.

There would be no point in the scheme if it didn't allow more people to borrow. Still I suppose it's better to force people who could afford repayments to pay rent to a BTL landlord.

ukcarper

Graham_Devon wrote: »

Still borrowing more, either way.

To suggest a scheme, whereby the entire point is to give easier access to higher loan to value ratios, doesn't allow people to borrow more is a bit naive.

The fact that you are comparing this scheme to people with a 20% deposit is frankly silly. The very point of using this scheme is precisely because you don't have those sorts of deposits.

Yes that is the point to allow people who haven't got the 20% to buy.

Graham_Devon

ukcarper wrote: »

There would be no point in the scheme if it didn't allow more people to borrow. Still I suppose it's better to force people who could afford repayments to pay rent to a BTL landlord.

I know, but that wasn't your point.

Your point was specifically that people couldn't borrow more. You've switched it now to more people borrowing.

The point of the scheme is exactly that, it's designed to let them borrow more.

Hence the guarentee from the government!

Thrugelmir

blinko wrote: »

Help to buy increases the risk for all involved

Far less risky than some of the toxic self certified interest only mortgages that some lenders must have on their books.

Screening of applicants for 95% mortgages is currently very high. Not least that buyers need to demonstrate affordability at interest rate levels of 7% - 7.5%.

After the initial pent up surge. There's bound to be a tapering off of demand.