HTB - Have you lost/made money?

Jon_B_2

AdrianC wrote: »

You're wrong. FWIW, I'm not much more than a decade older than you.

Well, that and the wild generalisations.

If the cap fits.

Look, you appear to be shooting the messenger here. But let's look at some numbers, shall we?

Let's consider Jon's £275k property. 5% HTB means that the taxpayer loaned him £55,000 and he saved up £13,750, leaving him with a nice comfy-rate 75% mortgage for £206,250. We'll ignore the various fees for the moment.

That's a repayment of about a grand a month. A quick play with a typical mortgage affordability calculator shows that a take-home income of about £3,500 or more would be required for that.

Let's assume that rent was 25% more than that mortgage - £1,250/month - and that it was just unrealistic or even impossible for Jon and his family to rent anywhere for significantly less than that.

How much of that other £1,750 was being saved every month? It's really not hard to see how a 90% mortgage, with another £13,750 deposit, could have been achievable with <say> an extra three year's saving, is it? Less than £400/mo? That's about the same as the monthly payments on a fairly prosaic car and a smartphone contract or two.

FWIW, I happen to think that the HTB Equity Loan is a good scheme - so long as you remember that any increase in value of the 20% is actually only a quarter as much as the increase in value of the asset it enabled you to buy, and so long as you remember that the point was to make the unachievable achievable, not as some kind of subsidised money-making scheme.

So who should be paying for your reproductive choices?

Damn it. I hate it when I agree with people I initially disagree with. Semantics innit.

I think the same largely about HTB. I suspect there are people who don't fully think it through. Not many people I know seem to have an exit strategy with regards to paying off the equity loan and the inability to recognise that the longer the delay in repaying, the more you are liable to pay back - which is why I said in my original post I hope the value of my house does not go up so much!!

I potentially could have saved another £13750 in the next three years, but then I already have a 2yo daughter and a second child on the way - childcare is nearly as much as our mortgage.

Unfortunately people in the 25 - 40 bracket are in a tough place - get on the housing ladder, or start a family?

I guess when you look at it that way then HTB did help me to achieve the unachievable!

seven-day-weekend

I don't know a lot about HTB.. I do know that the flat we bought for £85k in January 2016 was bought brand new by the previous owner using HTB in 2014 for £100k.

AdrianC

Jon_B wrote: »

Damn it. I hate it when I agree with people I initially disagree with.

<chuckle> Sorry!

Unfortunately people in the 25 - 40 bracket are in a tough place - get on the housing ladder, or start a family?

Easy decision for me. I hated children when I was one, and I've not warmed to them since.

I guess when you look at it that way then HTB did help me to achieve the unachievable!

Unachievable, in large part, by the priorities you chose - to have children before buying a house.

luis1988

Thanks for all the replies, some helpful, some not so.

Was never my intention to start a 'forum war' so I won't get into each point, but some do resonate with my partner and I.

Reason I started this thread was the idea that we believe it is much better to be on the housing ladder than 'dead money' paying into our landlady mortgage via rental.

Again I return to the original point, I only wanted some real-world examples of 'I bought at this price in 2012/2013 and its on the market at this price or has just sold at this price' etc. We managed to knock over £45k off our asking price and bought a three bed for a two bed price. Looking at similar properties in the area, we feel we should break even to begin with and hopefully gain some profit if property continues to rise.

Main reason we are purchasing is to eventually start a family. I am 27 and my partner is nearly 23, and we feel far more secure to start a family (at some point in the near future) with some control over our living situation.

I know it's all a huge gamble, but if we was to attempt to save the remaining £13-£15k we need for a 90% LTV we will 'waste' over £36k in rent. We feel that is crazy in the grand scheme of things...

littlegreenfrog_2

luis1988 wrote: »

Thanks for all the replies, some helpful, some not so.

Was never my intention to start a 'forum war' so I won't get into each point, but some do resonate with my partner and I.

Reason I started this thread was the idea that we believe it is much better to be on the housing ladder than 'dead money' paying into our landlady mortgage via rental.

Again I return to the original point, I only wanted some real-world examples of 'I bought at this price in 2012/2013 and its on the market at this price or has just sold at this price' etc. We managed to knock over £45k off our asking price and bought a three bed for a two bed price. Looking at similar properties in the area, we feel we should break even to begin with and hopefully gain some profit if property continues to rise.

Main reason we are purchasing is to eventually start a family. I am 27 and my partner is nearly 23, and we feel far more secure to start a family (at some point in the near future) with some control over our living situation.

I know it's all a huge gamble, but if we was to attempt to save the remaining £13-£15k we need for a 90% LTV we will 'waste' over £36k in rent. We feel that is crazy in the grand scheme of things...

Sorry for derailing your thread somewhat - I just wanted to point out that you are quite right to question whether this is a good investment for you and your partner or not, even if you are buying it as a property to live in rather than to make money on. I don't believe for a single moment that the people commenting wouldn't have exactly the same concerns. (And at least one of them is a BTL landlord so frankly he should keep his mouth shut rather than judging first time buyers.)

I can't comment on whether your house is worth what you are paying for it, but as long as you'll be happy to live there for a few years, you can afford the mortgage repayments even if interest rates go up (and it doesn't look like they will any time soon) and you have a plan for paying off the equity loan and stick to it, you should be fine.

Grenage

It does sound incredibly harsh, but I believe that children are a luxury - not a right.

I can appreciate that it's hard to save a deposit when house prices rise so quickly, but I believe home ownership is also a luxury, rather than a right.

I'm not convinced HTB really helps anyone other than house builders.

csgohan4

Grenage wrote: »

It does sound incredibly harsh, but I believe that children are a luxury - not a right.

I can appreciate that it's hard to save a deposit when house prices rise so quickly, but I believe home ownership is also a luxury, rather than a right.

I'm not convinced HTB really helps anyone other than house builders.

I agree there. Know friends who are getting their finances in order before even considering children. They are in their 30s.

HouseBuyer77

We managed to knock over £45k off our asking price and bought a three bed for a two bed price.

It may have started off over-priced then. The builder may have intentionally overpriced it as it gives them a lot of room to look generous in negoiations or if they get lucky end up selling it for far more than it was worth.

Alternatively demand may be low and the builder may have been looking to get rid of it with few options, hence the discount. However if the builder has trouble selling it, so would you. It may be that whatever factor is causing low demand will disappear within a few years in which case this works well for you.

ScorpiondeRooftrouser

AdrianC wrote: »

So who should be paying for your reproductive choices?

You miss his point. He's asking if a 30 year old earning close to £50K a year can't afford to have children, then who can? Only a very small proportion of people.

IF this were the case (and I am not saying it is) then that's a terrible indictment of our society.

If you have a couple with one of them working on average wage, having children should not be a financially based decision. if it is then the distribution of wealth is royally ******.

ScorpiondeRooftrouser

Grenage wrote: »

It does sound incredibly harsh, but I believe that children are a luxury - not a right.

I can appreciate that it's hard to save a deposit when house prices rise so quickly, but I believe home ownership is also a luxury, rather than a right.

I'm not convinced HTB really helps anyone other than house builders.

It's not supposed to help anyone other than house builders. If you give £1000 to everyone buying a house, that just raises the prices of houses by £1000. No politician is stupid enough not to realise that, whatever they might say.

Children may be a luxury rather than a right but if someone earning close to double the average wage has to worry about whether they can afford them, does that seem right to you? It's certainly not what things were like for the vast majority of the last 70 years.