Help to buy - Help me understand!

loumac

Apologies if there is a wonderful and useful thread already running but my brain is fried and I don't know where to start looking.


My DH and I currently rent and with a 3 yo DD and a baby on the way have constantly found it hard to save a big enough deposit to get on the ladder by ourselves.


We both work full time with a combined income of approx £64k per annum. We have sought advice and have been told that we may be eligible for help to buy.


We have looked at some 3 bedroom new build houses which are being marketed at £204k. With some support we should be able to have up to £12k deposit and were advised that HTB would loan us approx £41k. If mortgage payments are in the region of £800pcm - what do we do to pay back the HTB loan? Is it realisitic to save monthly to pay it back?


I don't really understand how the system works. My husband has been given the figures above and I'm the one that does the budgeting for the house and just can't get my head around it all at the minute.


Any help or advice would be greatly appreciated.

ACG

There are 2 versions of help to buy:
Help to buy equity loan - this was the first version which is only available on new builds. You put in 5% deposit, an equity loan for 20% and a mortgage for the remaining 75%.

Help to buy 2 - this is available on any residential property. You apply for 95% mortgage and put down 5%. The govt just insurers 20% for the lender if you were to default on your payments.

It sounds like you have been discussing the equity loan version which in all honesty I dont know the ins and outs of - a member on here called kingstreet will know more about this than most.

leveller2911

Christ alive........... Currently renting In Birmingham with an income of £64k and you need Government help to buy a house?.

With a net monthly income of around £3,500 you really shouldn't need Government help to buy a house.

loumac

leveller2911 wrote: »

Christ alive........... Currently renting In Birmingham with an income of £64k and you need Government help to buy a house?.

With a net monthly income of around £3,500 you really shouldn't need Government help to buy a house.

£64k is before tax. Our take home is nearer £3k which I know makes us very lucky.


However, rent is £800pcm, childcare is £800pcm. Bills, cars, food, fuel (my husband commutes 60 miles a day) etc. We are saving when we can. We have no debts or loans having spent 5 years of our married life paying off loans and cc's etc.


I was simply asking for some advice on a system I don't understand, not criticism.

loumac

ACG wrote: »

It sounds like you have been discussing the equity loan version which in all honesty I dont know the ins and outs of - a member on here called kingstreet will know more about this than most.

Thanks for your help. What's the easiest way to find an individual member? Or is kingstreet likely to see the post?


Haven't used this forum before.

ACG

He will no doubt see the post, he spends almost as long on here I do... if not more.

Feel free to ask any questions though, I will help where I can and im sure some of th other brokers on here will help if they can.

leveller2911

loumac wrote: »

£64k is before tax. Our take home is nearer £3k which I know makes us very lucky.


However, rent is £800pcm, childcare is £800pcm. Bills, cars, food, fuel (my husband commutes 60 miles a day) etc. We are saving when we can. We have no debts or loans having spent 5 years of our married life paying off loans and cc's etc.


I was simply asking for some advice on a system I don't understand, not criticism.

This is a forum (a place to debate) my "criticism" was based on your income of £3,300 net a month yet you need Goverments help to buy a house or is it a case of " We are not prepared to save for a few years and want it now"?

You could try to ecomomise on your outgoings. The link below shows there are plenty of houses to rent in the area for under £600 per month . Thats a £200 per month saving, £2,400 per year.People usually make sacifices to buy a home.

http://www.rightmove.co.uk/property-to-rent/Birmingham.html?minBedrooms=3&maxBedrooms=4&retirement=false&displayPropertyType=houses&oldDisplayPropertyType=houses&radius=5.0&index=60

With an income of over twice the average wage You don't need the Governments help , just cut down on your spending, rent for one thing.

Sorry if you don't like my advice but it is common sense . Its all very well mortgage advisors telling you who will give you a mortgage etc but remember they are selling you a product ,in the same way that a car dealer will try and sell you a car. Do they act in your best interest?.

Feel free to ignore my post if you wish, sometimes people only listen to what they want to hear....

loumac

leveller2911 - Having not used this forum before and only coming on to ask for some advice I was more than a little surprised at your response. You are of course welcome to pass comment but when you don't know all the facts and figures you do come across as 'critical'.


As my previous post mentioned we have already been working hard to pay off debts and loans to allow us to be in a better place to save and therefore are not all about 'want it now'.


We are doing all we can to reduce outgoings; however I do not feel that rent is something we can save on at the moment. I am listed as Birmingham but that does not mean that houses you have identified are actually anywhere near where I am presently.


With my husband already commuting, my daughter attending a local school nursery and my own place of work all around where we live - it is not feasible to just uproot to rent somewhere cheaper. In addition, as dog owners we are limited as to where will rent to us. Furthermore, I am currently 34 weeks pregnant so have no plans to move at present.


I just wanted some advice on how help to buy works. If we were not eligible because of our 'twice the average wage' combined income then that would be useful to know.

stator

I would suggest thinking of using the Help to Buy (Mortgage guarantee) scheme instead, which is for old houses not new build. It's less risky (no loan) and there is no paperwork for you. All you do is buy a house in the normal way (applying for a Help to Buy mortgage) and the bank simply buys an insurance policy from the government.
There's also a Nationwide product called SaveToBuy, this is not related to HelpToBuy. You save money into their special savings account and if you can do this for a fixed time you can apply for a 95% mortgage.

enthusiasticsaver

New builds are usually a much more expensive way of buying homes and it looks like the route you are considering will land you with two loans to repay which will be very expensive. I would think hard about that and consider what you would do should interest rates rise particularly if you are shortly going on maternity leave. My advice would be to save for a bit longer and get a bigger deposit and maybe consider the other help to buy scheme where you put down a 5% deposit and look at cheaper houses. Is it possible to move nearer your husbands workplace so you can cut down on commuting costs and maybe save on rent also by renting somewhere cheaper to make it easier to save? I know you said that you are settled where you are and would prefer not to move but if it helps you reach your end goal it could be worth considering.

loumac

enthusiasticsaver - thanks for your comments.


The move (to a new build or otherwise) is a move that's planned to take us closer to husbands work with me hopefully getting a new job nearer to wherever we move. In that sense we are flexible.


I just meant that I didn't see it as an easy short term solution to move and rent somewhere else to save money. There is nothing local to where we are currently that is any less than approx £750 a month and with a dog we are limited to who will rent to us.


In addition, being due in December and daughter settled at nursery I would like to be buying ready for when she is starting school which would be September 2016. So this is a long term plan we're working on. Definitely allowing us more time to save.


I admit that I wasn't aware of the details of either scheme which is why I wanted some help and advice so the second option that both yourself and stator have mentioned is something we'll look more into. Thanks again.