First Time Buyer - Help To Buy Questions

roland_

Hi all,

Me and my partner are looking to get our first mortgage at some point this year. I was wondering what peoples thoughts are on the Help To Buy guarantee scheme (not the equity loan), or if they have any tips/advice in general.

We're looking to get a new build, under 160k (live in the Midlands), and would be putting in between 5-10% deposit. From the research I've done, I feel like a fixed rate, portable mortgage would be best. Our current rent payment is 587.50 per month, so would be looking for something around (or less than) this.

I've read the MSE Mortgage Guide 2015, but if anyone could add their thoughts around the below it would be really appreciated:

1. Is using Help To Buy worth it?
2. Interest rates - It seems likely these will rise over the next year or so, so I'm thinking that a fixed rate mortgage would be best for us. Would most agree that a fixed mortgage is safer in the current environment?
3. How much can using a broker save you?
4. I'm thinking the next step for us is to get an agreement in principle - would this be right, or is there something I've missed out?

Thanks!

Dird

3. It depends whether you're willing to invest a few days of Googling or not. Just make sure you find somewhere with an independent broker that searches every bank/BC. The advisor from the estate agents I went & spoke to was going to charge me £500-600 and wouldn't have found a deal as good as what I have as they only checked 22 banks.
4. I guess AIPs are less important beforehand for new builds?

kingstreet

If you are putting down 10% deposit, there will be a handful of lenders open to you.

If a smaller deposit is used, you will have two lenders offering 90% to 95% on newbuilds using HTB - Mortgage Guarantee, depending on builder.

Typically, lenders offer 80% to 85% max on newbuild houses, less on flats.

TBeckett100

If doing help to buy you must use a broker. There is an affordability spreadsheet on the Internet http://www.plumlife.co.uk/About%20Us/News/Pages/Help-to-Buy---Equity-Loan---simple-to-buy.aspx

From memory Santander have a 5 year H2B product with a free valuation but a broker will advise if they are the best

In using a broker, you will not so much save money but a great deal of time and hassle. They suck out all your information, find a lender who should lend to you and then spend many hours on the phone on your behalf getting it done.

kingstreet

The OP says mortgage guarantee, not equity loan.

HappyMJ

roland_ wrote: »

Hi all,

Me and my partner are looking to get our first mortgage at some point this year. I was wondering what peoples thoughts are on the Help To Buy guarantee scheme (not the equity loan), or if they have any tips/advice in general.

We're looking to get a new build, under 160k (live in the Midlands), and would be putting in between 5-10% deposit. From the research I've done, I feel like a fixed rate, portable mortgage would be best. Our current rent payment is 587.50 per month, so would be looking for something around (or less than) this.

I've read the MSE Mortgage Guide 2015, but if anyone could add their thoughts around the below it would be really appreciated:

1. Is using Help To Buy worth it?
2. Interest rates - It seems likely these will rise over the next year or so, so I'm thinking that a fixed rate mortgage would be best for us. Would most agree that a fixed mortgage is safer in the current environment?
3. How much can using a broker save you?
4. I'm thinking the next step for us is to get an agreement in principle - would this be right, or is there something I've missed out?

Thanks!

A £144,000 mortgage (90% of your £160,000 budget) at 4% interest on a capital and interest repayment (most banks standard SVR-standard variable rate) will cost £760 per month over 25 years. Look past the fixed rate and budget on that figure. A 2% fixed rate mortgage will cost £610 per month for the period of the fix before reverting to the banks SVR. You could switch at the end of the fix but you'll have a new set of fees to pay, you'll have to research the market again and you'll have to meet the lending criteria at the time of the re-mortgage. Fees could be around £2,000 each time you switch so over a 2 year fix you would save something (around £1,500) but it's not much per month (about £60). I would always advise going for a mortgage that has a good SVR once the fix period has finished. The lower the outstanding amount the less you save and it doesn't end up being worth switching.

Don't forget to factor in maintenance...yes it's a new build but has the landscaping been done to a good standard or is it just grassed. I'd be wanting the outside space to be welcoming and useful. It won't add much value but it'll cost you money which you'll need to budget for. You'll need to repaint after only a few years. I bet it's all magnolia and white.