Is help to buy actually worth it?

Crashy_Time

dannyjebb wrote: »

The way I see it, you get 20% of your mortgage interest free for 5 years, after that you pay 1.75% as opposed to 2.35% which is the best rate we can get on a mortgage, in the area we are in house prices haven't rose much for the past 6 years or so, when you come to repay you pay 20% of the current value which is fair enough as technicially the govt owns 20% of the house. 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!!!!

Well we kind of know how it arose, but it is the unwinding part many people will need to get their head round. I think Corbyn is just the man for the job actually

hammy1988

It works for us.

Bought a nice new shiny New Build (nothing like the horror stories we have heard so far).

We put in £35k Equity from our first house sale. £47k HTB

We plan to remortgage within two years when our fixed rate ends and see if we can lend more to pay half of it off (Husband is Royal Navy and is borderline being promoted and moving up another rank).

If that fails e.g no promotion... we plan to remortgage at the five year mark and pay half again if we can.

The last backup plan... when hubby signs off on his 22 years in 8 years time, he gets a large lump sum and we are going to pay it off then.

On top of all that we are trying (I emphasise trying) to save money alongside as well to help towards it.

I DO believe you should really look into it and plan ahead, do not go into it on a whim and hope for the best in future financially. You always need to plan what to do for every monetary scenario.

Personally, I think it works best for those who know they will be receiving lump sums in the future as you are able to pay it off in staircase at 50%. We wouldn't have gone for it without knowing hubby would receive a lump sum after finishing in the RN...this is probably why 6 out of our 15 neighbours (We 15 are the first wave to move onsite) are all military families!

EDIT: We are North Devon...expensive housing here!

Spiker

Hi folks,
I am really against paying interest to the banks.

I believe with Help to buy it is mandatory to take a mortgage. If i had 200k in lifetime savings could i take a short term mortgage to make me eligible for the help to buy loan and then after the mortgage term pay the mortgagr off in full and be left with only the HTB loan interest free for 5 years?

Gaming the system a bit, but is it legally possible?

letitbe90

I thought about it once but came to conclusion that it isn’t worth it unless you really love the house and can pay the government loan very quickly.

I find the fact that the government’s loan is based on the % value of your house as well as increasing by RPI+1%, makes it daylight robbery. It’s a scheme that benefits developers and government, not homebuyers.

Instability

My main issue when looking at it was the fact that it had to be new build houses.

I would have been able to repay the 20% loan after 5 years therefore I'd have had an interest free 20% of the mortgage for 5 years which financially was great. But being forced to buy a new build with all the potential problems associated with that put me off.

If you can pay it back before the interest gets silly and you're happy with a new build then it'll be the best way to go about getting a new build with a loan.

dafa93

I think, despite some of the comments in this thread, you should do what works for you.

We have just bought our 2nd house using help to buy. We were able to buy a 3 bed detached, almost double the size of our current 2 bed terrace.

It is true that there is a premium with new builds. But at the same time, we have had our stamp duty paid and have upgraded kitchen with integrated appliances free of charge. Already huge costs gone so we are saving having to worry about affording new appliances. They gave us 'free' turf and are building a patio for free because the built our front footpath in the wrong place.

Just be sensible about what you can afford. We definitely wouldn't have done the full 20% loan, but have done what we can realistically pay back in 5 years. So remember you dont HAVE to borrow 20%, despite what your mortgage broker may tell you!

We are also lucky that we have paid off credit cards so will be in a position to overpay the mortgage every month.

At the end of the day, we have a house which we could stay in forever if we chose to, so dont have the pressure of needing to upsize again.

kingstreet

Spiker wrote: »

Hi folks,
I am really against paying interest to the banks.

I believe with Help to buy it is mandatory to take a mortgage. If i had 200k in lifetime savings could i take a short term mortgage to make me eligible for the help to buy loan and then after the mortgage term pay the mortgagr off in full and be left with only the HTB loan interest free for 5 years?

Gaming the system a bit, but is it legally possible?

No.

Minimum loan is 25% of the property purchase price and you can't repay the mortgage before you repay the loan.

buel

Hello.
My wife and I are thinking of using a H2B but are unsure about one aspect;
- If we were to choose a 5 year fix, would we be relying purely on an increase in house value, and so subsequent remortgage, in order to repay the Government loan? (Or would some of the capital have been paid off in that five years?)

DCFC79

buel wrote: »

Hello.
My wife and I are thinking of using a H2B but are unsure about one aspect;
- If we were to choose a 5 year fix, would we be relying purely on an increase in house value, and so subsequent remortgage, in order to repay the Government loan? (Or would some of the capital have been paid off in that five years?)

A question for a mortgage broker/advisor.

buel

Sorry, I should rephrase it as - do you only pay the interest on a mortgage for the first five years or so?