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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 46.1K views
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  • Here is the respected housing expert Henry Prior on Help to Buy from April. Its a BBC interview video, pretty balanced about why it was brought in intially and the problems in latter years.

    Screen-Shot-2017-04-02-at-09.23.55.png

    https://henrypryor.com/2017/04/help-to-buy/
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  • dhokesdhokes Forumite
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    If you choose a solicitor who charges a percentage of a sale then yes. You could pick a solicitor who charges a fixed amount and shop around.
    WEASELL wrote: »
    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?
  • I have made use of the HTB in Scotland which is a lot better as there is no interest added to the HTB figure.


    It worked out well for us as when we went to purchase our home the only available house on the estate suitable was a large 4 bed detached so we have a larger house for the money we would have paid for a 3 bed.


    As we are treating this house as possibly a home for life we don't plan on paying off the HTB anytime soon or ever.


    Had we have purchased a 3 bed outright we may have needed to upsize in the future but it has taken away that issue.


    Also if house prices were to fall you are insulated from making a greater loss.


    HTB won't work for everybody so it will depend on personal circumstances so you need to work out the pros and cons for yourself. If interest was added after 5 years in Scotland I think I would have still used it.
  • MobileSaverMobileSaver Forumite
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    dannyjebb wrote: »
    The real question should be how did a situation ever arise where the average joe spends the majority of their working life to pay for a place to live in!!!!

    Hasn't that always been the case?!?! All the grandparents I've ever known only cleared their mortgages at the end of their working lives.
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  • kingstreetkingstreet Forumite
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    WEASELL wrote: »
    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?
    Here's a copy of the HTB Buyer's Guide which has been available since April 2013, so don't let the date put you off.

    https://www.helptobuy.gov.uk/wp-content/uploads/Help-to-Buy-Buyers-Guide-oct-16-V1016.pdf

    When you submit a PIF & Reservation to a HTB Agent, in return you get your Authority To Proceed, a copy of the above and a Personal Worked Example of how the scheme will work for you.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • edited 28 September 2017 at 10:34AM
    SuboJvRSuboJvR Forumite
    472 posts
    edited 28 September 2017 at 10:34AM
    I think whether HTB is good or not depends entirely on the area and individual factors involved, there's no rule about it suiting everyone across the country at all times.

    For us, it's incredibly helpful.

    We live in the south east. Houses here are expensive here, as everyone knows. Renting here is expensive; but still the prospective mortgage cost is less than renting. This makes it very difficult to save for a 10% deposit (say, 30-35k). Not impossible, but difficult. In another few years we would've saved the extra for higher deposit + moving costs + other costs associated with buying a non-new build (e.g. unexpected repairs)... but we'd also be getting nearer 40. Not the end of the world, granted...

    It's not essential to get on the ladder ASAP. And others make compromises e.g. moving to different areas. But we moved down south to be nearer my family who do need some support from time to time, so to be able to buy in the region is really valuable to us.

    We also have visa complications to throw into the mix that make 95% mortgages, even 90% mortgages very unlikely. Some lenders only consider 75%+ hence HTB steps in to bridge that gap!

    The way I see it, we are deferring some of the costs we would otherwise have had with buying a home whilst avoiding some others (unforseen repairs and such).

    Are we worried about house prices changing? Possibly, but up or down the HTB moves with it. But is this going to be our forever home? Possibly? Not sure. If it is, after 7-8 years we will remortgage to buy out the HTB loan as equity will allow it. We will be saving, or overpaying the mortgage, to make that happen.

    What I do know is that non-new houses are selling (and yes, actually selling) in this area for the price we agreed on our new build four months ago. And similar new builds are now on the market for 30k+ more. Yes this bubble will maybe burst but I'm not convinced, especially with new rail links (will be 5-6 trains an hour to a variety of stations) coming here for London making it all the more attractive.

    So it is a bit of a risk, but I don't feel we are rushing into anything as we have been researching this area for several years now and it's only becoming more attractive to buyers.

    Edited to add: If something crazy does happen and our house value goes up by 100k after 5,6,7 years, we would then have enough equity to move again to a similar house and just buy out the HTB that way.
  • gycraig_2gycraig_2 Forumite
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    Personally looked at it and chose to save for a 10 percent deposit. Interest rates may rise and fall but to an extent I'm gonna pay what I'm gonna pay.

    Last thing I want is to be petrified of house prices in my area shooting up.

    Problem is you don't gain anything if your house shoots up in value as so do the houses you are looking at.

    Doesn't make sense if house is under 150k ish as it's not gonna take years to save the deposit anyway
  • Gycraig wrote: »
    Personally looked at it and chose to save for a 10 percent deposit. Interest rates may rise and fall but to an extent I'm gonna pay what I'm gonna pay.

    Last thing I want is to be petrified of house prices in my area shooting up.

    Problem is you don't gain anything if your house shoots up in value as so do the houses you are looking at.

    Doesn't make sense if house is under 150k ish as it's not gonna take years to save the deposit anyway

    That can be applied to every aspect of HPI, regardless of whether HTB is used or not.

    The simple fact is that to anyone looking at upsizing in the future, the huge amounts of HPI we have seen will be a bad thing.

    I can never understand why people feel so happy that their 2 bed flat has gone up by £50k as the house down the road that they may want when kids arrive has gone up by £100k!
  • cloocloo Forumite
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    I've worked with senior people in the real estate business who think there are commercial mortgages that are much better value than help to buy.
  • For us godsend. Less than perfect credit history couple with buying at peak in 2007 and a market that still hasn't recovered (in fact making 15k loss on purchase cost)

    Therefore only need 5% deposit builders have paid half legal fees, estate agents fees and stamp duty. New mortgage for next 5 years £100 per month more than current. Getting large 4 bed house compared to current 1 bed flat.

    In five years time childcare fees won't be an issue so will remortgage to pay off equity loan. Unlikely but if prices shoot up we will have loads of equity to be able to buy new property:

    Without htb we would have had to go into rented as wouldn't have had enough deposit to buy.
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