First Time buyer - Help to buy schemes / general mortgage advice please!

NDAmerock

Hi everyone, I'm brand new to MSE and this is my first post, so please be nice!
I am a single person on around £25k a year before tax and as a result I should be able to get around 100k for a mortgage (based on online calculators). I have a decent amount of deposit thanks to inheritance and savings and I'm looking to buy my first home. I'm currently renting.
I have just opened a Help to Buy ISA this month as it seems to make sense to get some money for nothing!
I am wondering if anyone can give me some advice about Help to Buy schemes? Are they worth doing? How does the equity loan from the gov work? Can you pay it off in installments or does it HAVE to be repaid only when the house is sold.
Also, in terms of the Help to buy schemes, I have a much bigger than 5% deposit, it would be closer to 30% can I still apply for help to buy schemes with this size deposit? I know that I am in quite a fortunate position with the size of deposit I have, however, being on a single income is limiting me hugely with regards to how much the bank will lend me and I'm feeling pretty confused and down about my choices.
Any advice would be greatly appreciated! Thanks!

da_rule

The Help to Buy equity loan only applies to new build properties.

You can take either 10% or 20% of the purchase price as loan. This is then either repaid on sale or during your ownership. However, you can only make a maximum of two payments if you take the 20% option or one payment for the 10% option. When making 2 payments, they must be for the half of the original percentage loan. You will be charged interest on the loan after 5 years. There are also fee's when paying off the loan as you have to get the property valued and there may be legal costs.

The only rule is that you must have a mortgage of at least 25%. So, you can have a deposit of up to 55% and still be eligible.

isadreamalie

Regarding new builds I am told there are a lot of hidden costs and certain fixtures you have to pay for etc

I was thinking of this scheme but if you have a good deposit better not to go for it as the loan could work out expensive in the long run

Also the help to buy isa no good if property more than 250

NDAmerock

Thanks for your help!

You can take either 10% or 20% of the purchase price as loan.

Thanks for this information, I didn't realise there was an option, and I suppose I was hoping that it would be flexible... Some of the properties I've been looking at are advertised around the £150k region, however, when reading through the particulars it states that the "150k is with 'Help to Buy' " and without it's around £180/£190. Is the advertised price assuming I take the full goverment loan and so I would need to fund the £150K myself? (ie. deposit and mortgage). Or are Help to Buy properties sold at a reduced rate? I can't imagine this is the case but, as I said, I'm getting pretty confused by everything!

Also the help to buy isa no good if property more than 250

Not a problem! I could never afford this!

It seems from reading your comments that if I go for the Help to Buy scheme i'll not only have a mortgage to repay, but also the govenment loan, I'm not sure if it's worth if given the inflated prices of new builds... Does this seem like a fair conclusion?

kingstreet

If you haven't got one, get a hold of a copy of the HTB Equity Loan buyer's guide from the HTB website.

Get an experienced newbuild broker to do Government and lender affordability to see if this is a goer.

The HTB Equity Loan is min 10% to max 20% in 1% increments, so you can have 14% if you like.

It's interest-free for five years, with "fees" starting in year six and increasing each year. They are called fees as if you need to claim state benefits, these will not be included. Remember, the loan is tied to the value of your property. If you take 20% today, you will be paying back 20% of the future value, whether higher or lower.

You need to check how the developer advertises. They should NOT be showing a property at a price net of the HTB Loan. Always check for the gross price, then that will be made up of the mortgage, HTB loan and your deposit.

Cakeguts

As this is your first bought home how much of the deposit would you have saved if you hadn't had any inheritance? Owning a home is not like renting one. If you can't pay the mortgage there is no safety net. The most you will get is the interest paid. All repairs are down to you so if the deposit money mostly consists of inherited money you might want to keep some of this in case you lose your job and are unable to pay the mortgage. Or you might want to spend a bit longer getting used to saving?