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Is help to buy actually worth it?

edited 30 November -1 at 12:00AM in House Buying, Renting & Selling
51 replies 46.2K views


  • cashbackproblemscashbackproblems Forumite
    1.8K posts
    its a con, is paying 100k+ more worth all the "mod cons" i.e. cheap ikea tat, as opposed to buying an older property and owning 100%? As mentioned above HTB in London is a joke 600k for a 2 bed badly new build, you will never get rid of it in the next 5-10 years.
  • moneysaver12moneysaver12 Forumite
    2K posts
    Part of the Furniture Combo Breaker
    We looked at help to buy for a new build. The house we looked at would have been about 70000 more than the house we ended up buying. Plus we would have needed to pay for carpets etc. All our deposit thst we had would have gone. Then we would have to pay back the mortgage and the money we lent.

    In the end we bought a 17 year old house. Similar size to the new build but 70000 cheaper
    Married 09/09/09
  • dhokesdhokes Forumite
    197 posts
    Part of the Furniture 100 Posts Combo Breaker
    Who wants to buy a quarter of a depreciating 500k London flat!?

    On paper, me. I'd buy things when they're falling in price and sell things when they're rising in price.

    That said, a house purchase is generally more than just a financial decision as emotions are involved.
  • getmore4lessgetmore4less Forumite
    41.8K posts
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    its a numbers game and exit strategy.

    A tiny bit of HPI can kill it unless your exit strategy is to sell up.

    Your savings are the interest free loan and a lower rate on the rest.

    if you work on say 2% on 20% and 0.5% on 80% that's and average saving of around 0.8%

    that means 0.8% HPI and you end up owing more than you save.
    (adjusted for investment performance or extra savings on overpaying)

    once interest kicks in eventually it costs more than the cost of borrowing.

    The other factor is this is an equity based loan and like many other schemes YOU pay 100% of the maintenance/improvement costs and any fees associated with paying the debt off.

    You then have to factor in new build premium and resale potential.

    if the plan is to move on in by y5/6/7 then the HTB may be a good option if it gets you going at the cost of giving up some HPI.

    if looking longer term be aware that HPI could become very costly to buy out and taking a hit on higher costs up front could save a bunch longer term.
  • The worry for me would be if the exit strategy is purely to sell up.

    Yes, there is the view that London is a "safe bet" etc, but where there is a development of 500+ units, my worry is that there will be a glut of properties on the market in 5 or 6 years time, with owners possibly desperate to sell.

    From one of the threads above, I think HTB certainly works in other parts of the country i.e. non-London or SE
    Asking prices of 75k for a new build flat is a complete world away from £500,000 + for 2 and 3 bed flats.

    It's such a shame, from our FTB point of view- HTB London seemed to hold a bit of promise last year, but I'm very glad that we haven't gone down that route.

    But who knows? Maybe in 5 years time the asking price on 2 bed flats in SE London will be something like £700,000 or more?!
    Just wonder how FTBs will be able to pay for this?
  • robatworkrobatwork Forumite
    6K posts
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    As a general principle, whenever you buy something that you can't afford outright, you are going to pay more than if you buy it outright.

    Whether a TV on finance, car on HP, anything on credit card, sofa on "pay nothing now".... so a house on HTB or mortgage come to that, is no different.
  • GwylimTGwylimT Forumite
    6.5K posts
    My son and his partner used help to buy, they had a decent deposit that they put into (at the time) high interest accounts, at the end of the interest free period the HTB loan was paid off in full and they had the interest for investing the money. It didn't work out that much better than using the money as a deposit, I think they made about £1000 per year in interest, they used the interest towards their mortgage over payment.
  • JP1978JP1978 Forumite
    527 posts
    We looked at HTB on new builds (Scotland) that were circa £200k (4 bed detached, nice area) but as we would have so much in equity from our sale (40k) we were not eligible unless we bought a more expensive house so the percentages fell in line with what was allowed.

    So, it did us a favour really, we moved onto looking at slightly cheaper older houses on an adjacent estate and ended up buying a 10 yr old home that is far superior in build quality and finish than the new builds!

    Beleive in Scotland the HTB loan is interest free through its full term?
  • Another enticement I've noticed from HTB London developers- offering to pay stamp duty.

    This definitely piqued our interest as SD on an almost 600k property is not an insignificant amount! But in the end it wasn't enough to make us take the leap!

    Although, I'd imagine that the initial buyers in the development would be quite annoyed as often, this offer only comes out a few months after the initial launch, and presumably, the developers are not meeting their sales targets.
  • Here is a big problem with help to buy. This was the 2013 help to buy.
    Buy a property and take the 40,000. It claims you can pay back the money without penalty.
    When you try and pay back the money in under five years, you need to pay for a house
    valuation, get a solicitor to deal with it and pay for their work. If your 210,00 house has risen to 310,000 they want 20 per cent of the profit. You end up paying them 60 thousand pounds just to escape from the deal.
    My advice avoid this deal at all costs. If you want to move upmarket in the future it makes it so difficult.
    Can anyone tell me where in all the leaflets/information this was made clear, because we believed the money could be payed back in under five years with no penalties?
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