Help to buy

x90tsb

Hi everyone,


I am sure this has been asked before - but I cannot find an answer anywhere.


I'm an FTB and have found a house I REALLY like at £160,000.


I want to use the help to buy scheme, so 20% of the house's value is £32000? (I think) so that is the 20% loan from the government.


I understand that is interest free for the first 5 years. Can someone tell me after year 5, what sort of monthly charge I would pay on that please? I cant find this info anywhere!


I understand that when I sell the property, 20% of the sale price goes back to the government, but cannot find any reference to a monthly cost after year 5. I have found some info stating it will be 1.75%, but of what, when is this paid, how is this paid, I have found reference to a monthly admin charge, how much is this and again how is it paid?


Thanks in advance for any help you can offer.


Cheers,


Tom

SG27

It's 1.75% after 5 years. This increases by RPI each year. So if RPI is 4% in year 6 you will be charged 1.82% in year 7 (4% added to 1.75) and so on.


In your case. 1.75% on £32k is £560 a year, roughly £47 per month.

x90tsb

Many thanks for quick reply SG27, I will google RPI!

stator

Just to confirm, this is a new build property, correct?

The Help To Buy for old properties is completely different and is in my opinion less risky.

x90tsb

New build yeh!

x90tsb

Why do you say less risky? Thanks

stator

The Help To Buy scheme for old properties is called Help To Buy Mortgage Guarantee (H2B MG). HTB MG is simply a 95% mortgage. You buy a house for £100,000 and take out of a mortgage for £95,000 with a £5,000 deposit. You fix the rate for say 5 years and after 5 years you can remortgage (assuming you are still mortgageable). There is no equity loan or loan repayments and inflation to worry about. If you want to remortgage on the Help To Buy new build you'd have to pay off the loan. Plus you will find your conveyencer has to do extra work for Help To Buy new build and will charge you more.
But the main risk with buying a new build is that the house price of your new house falls! After 5 years or 10 years of living in a brand new house it won't be shiney and new and attractive. It will be worn in. Plus on brand new housing estates the developers have set the price for the houses, the secondary market is different and until people start selling their houses on that estate you won't know how much yours is truly worth. So if you end up in negative equity you might not be able to remortgage and you would be stuck paying the standard variable rate for ever
Sorry if I'm scaring you, I'm not qualified in any way, just something to think about and maybe get some impartial advice?