help to buy scheme advice?

grahamlindsay

gsmmad wrote: »

You can have 20% deposit and take advantage of the equity loan however this is only on a new property. It will allow you to get 60% LTV which will allow you to get some great mortgages.

When you pay back the 20% HTB equity loan, you will have to do this at the present house value. If the house price goes up, you pay more. If it goes down, you pay less.

It's an interesting risk. Lower interest rates + free interest for 5 years on the 20% equity loan but the potential to pay more for that 20% in the future.

That makes it a bit more complicated. I thought you only paid back the fixed sum you borrowed not as a percentage of your property's value.

It still might be a good option. An extra 20% of my mortgage interest free would be a huge chunk of money saved.

I guess I could get a decent rate fixed for 5 years on say a 55% mortgage. During that 5 year period keep the mortgage payments low and focus on paying the loan then after 5 years reduce the term of the mortgage by overpaying what I had been paying on the loan? My outgoings then remain [as close as possible to] constant and I've taken a huge chunk of interest off the mortgage.

anselld

I isn't a free lunch. You get a smaller mortgage because you don't own 20% of your house. Very different to an interest free loan.

If you are expecting the value of your property to stagnate or drop after purchase, or if you cannot afford a deposit then it is a good deal. Otherwise go for the full purchase.

ethank

This is available on new build property only.

[Deleted User]

Our MA told us that if you buy through the Help to Buy scheme the government will lend you 20% of the deposit and you pay 5%. That 20% is interest free for 5 years, after which they start to add an interest rate on it. The government will also want 20% of any increase in the value of your property when you sell it.

And yes it on newbuilds only.

kingstreet

Deleted_User wrote: »

Our MA told us that if you buy through the Help to Buy scheme the government will lend you 20% of the deposit and you pay 5%. That 20% is interest free for 5 years, after which they start to add an interest rate on it. The government will also want 20% of any increase in the value of your property when you sell it.

And yes it on newbuilds only.

It's a loan of 10% or 20%. Your deposit can be as much as 65% as the only minima is a 25% mortgage.

Fees start in year six at 1.75% of the loan and these can be paid monthly. They will increase slightly each year. If inflation runs at 5% per annum, they would be 1.75%, 1.87%, 2.0% in the following years and so on.

You can download the buyer's guide here;-

https://www.helptobuy.gov.uk/documents/2015/12/equity-loan-buyers-guide.pdf

Finally, yes, you repay the percentage of the property value at the time of repayment, not the £ amount you borrowed at the outset. If your property increases in value, you will pay more. If it falls, you will pay less.

wymondham

ethank wrote: »

This is available on new build property only.

.... as its designed to help builders sell their expensive houses....

jacko74

wymondham wrote: »

.... as its designed to help builders sell their expensive houses....

Exactly. Why can't people see the real and accurate title for this scam should be the "Help Builders to Sell Overpriced Newbuilds Scheme"

kingstreet

A newbuild property in Milton Keynes we helped purchase in August 2013 for £250,000 completed in February 2014.

We're just doing the two year review and the current value is £325,000.

The current values are matching the current newbuild prices on later phases.

It is possible for the newbuild premium to see prices fall, but that is not necessarily true everywhere all the time.

clint_S

We purchased our house using help to buy in October. In our scenario we had enough for a 20% deposit.


The help to buy works on the basis that the person pay from 5% deposit up to 20% deposit, the HTB will make up the rest up to 75%. If your deposit is 10% you only get 15% from HTB, not an additional 20%.


Your loan is a percentage of the house and not a monetary figure, i.e. if you house is worth 100K they give you 20K but when you pay back your house is worth 200K you owe 40K, however if the house is worth 50K when you sell you only pay 10K back. The loan must be repaid within 25years. the first 5 years are interest free, after that your interest is bases on bank of England rates and increased yearly in line with RPI.


Your mortgage must be through an approved lender and they must be advised of the HTB on the property, which means you can't get the best rates.


My issue is that my house is already worth £10k more than when I purchased it, identical house, slightly older, in the estate went for this and a new build of the same style is already £7K more and only a few doors down.

Jon_B_2

jacko74 wrote: »

Exactly. Why can't people see the real and accurate title for this scam should be the "Help Builders to Sell Overpriced Newbuilds Scheme"

What and you don't honestly believe developers ran their own schemes before HTB? Get real.