Help to buy or Not

kpanchal

Hi everyone, me and my fiancee are looking to buy our first home. We have £60k to put down as a deposit which would be 20% on a £300k house - so we were looking to do this without Help to buy. However, looking at houses, we get a small 3 bedroom house for that which I think we will quickly out-grow. So I am wondering if we can stretch ourselves to get a bigger house?

My question therefore is that would we benefit from the Help to buy scheme as first time buyers even though we have £60k to put down on a house which is a lot of money. And I imagine the scheme is designed for people who don't have this kind of money for a deposit?

I have friends who are saying that we should take advantage of the incentive from the government, but others saying that we will lose out on growth and equity of the property after 5 years when interest in the government loan starts to kick in.

Thoughts?

getmore4less

Lets start with

I have friends who are saying that we should take advantage of the incentive from the government, but others saying that we will lose out on growth and equity of the property after 5 years when interest in the government loan starts to kick in

If you need more money to buy the bigger place and you don't have it then if you bought the smaller place and then moved to a bigger place you will still lose out on the growth of that bit you did not buy and you have one set of buy/sell move costs on top.
offset by living in a potentially slightly cheaper to run place for a while.

You also have to consider the costs of buying back the equity or letting the interest kick in which by then it may be less than a mortgage anyway.

If you believe crashy that growth you missed out on would be a loss.


A second factor is the interest rate, your LTV will go from 80% to 75% or better that should improve the interest rate.

Some lender 80% LTV is already getting good rates so the difference may not be that big.

With £60k and 20% equity loan you could go up to the max £600k subject to your affordability for a £420k mortgage LTV 70%


if £300k/£240k mortgage is the affordability limit with the £60k deposit you could go to £400, HTB £80k, £60k deposit and £240k mortgage LTV 65%

The lower rate starts the savings pot to buy back the 20%(or less 20% is a max)


This will limit you pool of properties.

kingstreet

kpanchal wrote: »

Hi everyone, me and my fiancee are looking to buy our first home. We have £60k to put down as a deposit which would be 20% on a £300k house - so we were looking to do this without Help to buy. However, looking at houses, we get a small 3 bedroom house for that which I think we will quickly out-grow. So I am wondering if we can stretch ourselves to get a bigger house?

My question therefore is that would we benefit from the Help to buy scheme as first time buyers even though we have £60k to put down on a house which is a lot of money. And I imagine the scheme is designed for people who don't have this kind of money for a deposit?

I have friends who are saying that we should take advantage of the incentive from the government, but others saying that we will lose out on growth and equity of the property after 5 years when interest in the government loan starts to kick in.

Thoughts?

Presumably, you are buying a newbuild.

Yes you can use HTB and put down more than 5% deposit.

You can choose an HTB loan of between 10% and 20% of the purchase price, in 1% increments.