"help to buy schemes" too good to be true?

victoria1980x

I can't get my head round the governments help to buy scheme, they seem too good to be true?

Has anyone bought a house through one of theses schemes? If so can you tell me a bit about your circumstances or experience please.

thanks all

Thrugelmir

If sounds too good to be true then normally it isn't......

ACG

There are 2 schemes:
1) HTB 1 - this was the original help to buy scheme and is for new builds only. 75% Mortgage, 20% Equity loan, 5% deposit. I dont know a lot about this one myself.

2) HTB2 - This is for any property. 95% mortgage, 5% deposit.

Is there anything in particular you want to know?

ReformedShopper

Nothing is for free, and both the Help to Buy schemes (Equity Loan and Mortgage Guarantee) often involve intense scrutiny and vetting measures to ensure you can pass the affordability rules - so your credit score would have to spotless, and you'll have to jump a few more hoops, and have a few more fingers in the pie to get any mortgage approved.

With the Equity Loan scheme for example, you will first need to jump through the developers hoops, and the Home Buy Agent hoops, before jumping through the lenders hoops...

But if you manage to raise the 5% deposit and meet affordability, then at least you wil get on the property ladder quicker and stop paying someone elses mortgage. Just do your research... it's probably the most important and most stressful purchase of your life (well I've found anyway)

ethank

We went with HTB-Equity Loan. We were able to scrape together the minimum deposit for our New Build, but would have taken us a few years to save the amount of deposit we needed to buy the house we have got. 7 months on and I am so happy that we went with Help to Buy but it was a long process.

28 day reservation period turned into 9 weeks!

victoria1980x

thanks all, we have a deposit so far of around £30,000 but we want to get a house that would be towards the top end of what the scheme offers. It just seems to good to be true.

Is the interest rate on the repayments larger? Can you pay more than 5% deposit?

we won't be able to go in for it until august 15 anyway as my OH works at a hospital in Portsmouth and I'm in devon. Hopefully by then we will have a deposit of at least £40,000.

We don't want a new build as we want somewhere with a couple of acres.

ACG

It depends on the lender. Woolwich for example will allow you to put in up to 9.9%.

Interest rate will be higher but thats to be expected as you are putting in a smaller deposit - the less the deposit the higher the rate.

They are roughly in the region of 5.5%.

victoria1980x

ACG do you think the scheme will be pulled soon?

Thrugelmir

There has been much debate on the topic recently. A modification to the schemes is quite possible. Given the current focus on the level of high house prices in the UK.

ethank

Equity Loan scheme has been extended until 2020 - but two of the major lenders - Halifax & Nationwide will now will only accept FTB's (rather than those who are selling their own properties) and through their own branch network.

Given that most developers use a preferred mortgage broker, rather than in brances, this could mean that Halifax and NW no longer really want this business.

It is expected that Mortgage Guarantee will be scrapped.

victoria1980x

We're both first time buyers and both with HSBC. Thanks all for the input.