Htb/el

Jambo5

Ok was messing around on affordability calculator a few days a go but something has just come to me. Halifax calculator.
its says combined wages and affordability 179000.

We are looking at a new build worth 140k just say 5% deposit of 7k @25 years offers a fix 2 years at £789 a month.

So this is the bit I wondering if I have done wrong?
I added a further 28k (20% EL) to our 7k (5%deposit)...=35k
Mortgage of 105k and monthly repayments of £464....

Wow what a difference! BUT here is what I just though about and prompted this tread. With EL you have 5 years interest free so To repay this loan in 5 years you will need to make a further £466 per Month on top of your mortgage. Wow again.

My questions are...what if you don't make the payments? I read somewhere you get charged after 5 years at a rate of 1.67? So again if you don't make payments you a charged a further £467 a year interest? And this will multiply over years etc leaving you less equity again.

Suddenly this EL doesn't seem so rosy.....please somebody tell me that the above is wrong and i'm an idiot lol

Or should I look at it as that you should get a home say for a 100k but because of loan you can get a bigger one but you'll only own 80% of it when you sell.

Sorry again...this bugged me earlier just hope I wrong.
Obviously I would want to repay my loan asap but it just seems alot to repay especially being a FTB. Got a feeling this could be potentially a pit fall for some people if there not on the ball.
Cheers hope I wrong (again lol)

stator

In my opinion the quity loan scheme is worth steering clear of, the mortgage guarantee scheme is much more appealing.

You don't have to repay the equity loan over 5 years, they just encourage you to do so. It's interest free for 5 years and after that they start charging you. You can start repaying it after 5 years, or borrow the money from elsewhere to repay it. If you don't repay the interest goes up every year to encourage you to do so. If you've made enough repayments on the mortgage you could remortgage to a higher LTV in order to repay the loan, if you have enough equity.
Sorry but I don't know specifically what happens if you don't make the equity loan repayments, pressummably they would chase you for the debt in the normal way and stop you selling the house.

The other thing to note is that if house prices go up in 5 years the government still own 20% of your house, so you wouldn't get the entire benefit of rising house prices. And to repay the equity loan would cost you more than 20% of the original mortgage, it would be 20% of the current property value.

Jambo5

Is Mortgage guarantee for New builds to? And do they do 5% mortgages for mortgage guarantee?
We will have around 10k in July and when we are thinking about applying but have no idea about fee's etc and how much they cost not to mention how much a broker is? As I will need some help as I have late payments what are over 5 years old.

But yes...I think I will try and give the EL a wide birth.

stator

Technically mortgage guarantee doesn't disallow new build houses, but most lenders don't offer it on new build

Jambo5

Its all complicated me thinks. Its all bricks and mortar at end of the day. I will be keeping away from Help to buy I think

Jambo5

Come on all these mortgage advisers. Are my wrong or right?
Is this scheme another plot from our lovely government that will end badly for some people? Maybe even a another recession again when people get hit badly with interest.
Be good to know the full SP thanks

amnblog

The scheme enables those with a minimal deposits to access mortgage rates priced for 25% deposits - this reduces mortgage interest payments.


Is also makes the home in your example available to a buyer who could not raise a £133,000 mortgage nor afford £789 per month.


Yes 20% of the property is not owned by the purchaser so they lose 20% of any potential capital growth, they also lose 20% of any loss due to drop in value.


There is no cost to this offer for 5 years.


It is clearly proving popular but whether it is right for each individual is a matter for them.


Some property purchasers end badly for some people - with or without any Government Scheme.