Help to Buy - watching a car crash

avacapri

So apart from the fact the HTB scheme makes (some) builders rich and helps meet the government target for new build is it worth it?

it definitely gets people on the housing market even if they will be trapped in a few years time, that is unless we see a property boom (can't see that happening)

perhaps it's beyond my knowledge of economics - perhaps the HTB scheme increases jobs - increases Taxes - stops housing market stagnation - increases sales of housing goods etc - there must be other factors as to why this scheme was restricted to new build.

i do think parts of the scheme are great but as a whole, not very clever, or like I say am I missing the bigger picture

whatdoyouthink...

avacapri wrote: »

The mortgage company dont care they have the first charge on the property at 80% loan to valuation
and if the property does go down its the buyer that will lose out first

as I understand it if the buyer has 5% on a property purchase 200k and takes out 20% HTB
40k FROM GVT
10k SAVINGS
150K MORTGAGE

say the house is overpriced and has fallen 10% (reports say this is conservative) and the buyer manages to sell

sale price £180
mortgage company get their 150k back first
the government want 20% back to the gvt - 36K
total £186k not enough to go around and the seller has lost their initial deposit, the government still want the money back so the seller is left with a loan of 6k.

my view is that the scheme is a potential nightmare

Your calculations for the HTB seller being out of pocket by £6k if they were to sell would only work on the assumption they repaid zero to their mortgage provider.

avacapri

sorry dont understand the last post can you do the calculations for me

avacapri

ok i understand, if they were a repayment mortgage they would have paid some back, well after a few years they would not have paid off much, so assume interest only

anselld

avacapri wrote: »

ok i understand, if they were a repayment mortgage they would have paid some back, well after a few years they would not have paid off much, so assume interest only

Probably still cheaper than renting over the same period.
You seem ungrateful for the help the tax payer has given you.

gycraig_2

All the doom mongering. Personally bought a new build and didn't use help to buy as simply couldn't be bothered with all the paperwork valuations etc etc.

I pay 450 a month for my mortgage a doctor bought the house next door and rents it out for 750. So I'm saving 3.5k a year while paying my mortgage off.

Help to buy was clearly explained every step of the way including the pitfallls. I bought my new build knowing it would probably be at least a few years till I could sell it for a profit.

Isn't a house in my area at less than 30k more than my "over priced new build" that I would swap
It for.

The 6k loss posted above doesn't include the fact that the mortgage is probably 100s of pounds a month less than renting. If you use the interest free option it makes the interest only argument worst.

Interest only would be pennies on a 200k house compared to the rented one next door

avacapri

anselld wrote: »

Probably still cheaper than renting over the same period.
You seem ungrateful for the help the tax payer has given you.

ok, so I am 50 and never had a government help to buy scheme.

I don't see what the relevance if it being cheaper than renting has to do with it unless you are saying it justifies overpricing new builds?
what happens 10 years down the line when payments are being made to the mortgage and the government and there is hardly any equity in the property, certainly not enough to sell and buy.

the problem is the scheme in its present format allows builders to charge a premium on new builds that they couldn't before the scheme was introduced.

avacapri

gycraig wrote: »

All the doom mongering. Personally bought a new build and didn't use help to buy as simply couldn't be bothered with all the paperwork valuations etc etc.

I pay 450 a month for my mortgage a doctor bought the house next door and rents it out for 750. So I'm saving 3.5k a year while paying my mortgage off.

Help to buy was clearly explained every step of the way including the pitfallls. I bought my new build knowing it would probably be at least a few years till I could sell it for a profit.

Isn't a house in my area at less than 30k more than my "over priced new build" that I would swap
It for.

The 6k loss posted above doesn't include the fact that the mortgage is probably 100s of pounds a month less than renting. If you use the interest free option it makes the interest only argument worst.

Interest only would be pennies on a 200k house compared to the rented one next door

so are you saying the Help to buy is a good thing and does not encourage some builders to charge a premium on new builds because they can?

or are you saying it does not matter that they charge a premium because its cheaper than renting?

Monkeysocks42

I have a HTB mortgage on a house which I purchased 3 years ago. Houses on the development have sold for more than they cost to purchase, not massively more but still more. I have also built up enough equity by making my mortgage payments each month to cover the cost of selling and purchasing a new property with a 10% deposit which I just didn't have before. As fast I was saving for the deposit (while renting), house prices were increasing and it got to the point that I couldn't buy a property in an area I wouldn't even want to live in. Thanks to HTB I've been able to live in a really nice house, in a lovely area and effectively been able to continue to build my next deposit up by making mortgage payments rather than continuing to pay my landlord's mortgage.

kingstreet

avacapri wrote: »

ok i understand, if they were a repayment mortgage they would have paid some back, well after a few years they would not have paid off much, so assume interest only

Interest only is not available on HTB purchases.

An exit strategy is very important. Saving the equivalent of the difference between the HTB and non-HTB monthly payments each month would reduce some of the risk of a future reduction in values.