Help to Buy - watching a car crash

avacapri

Monkeysocks42 wrote: »

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.

Hi - would you have liked the HTB scheme to have covered all houses so when you bought you could choose from the whole market?

avacapri

kingstreet wrote: »

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.

didnt know that, cheers

so do you think HTB is ideal?

Monkeysocks42

avacapri wrote: »

Hi - would you have liked the HTB scheme to have covered all houses so when you bought you could choose from the whole market?

The HTB mortgage guarantee scheme was available when we purchased which would have allowed us to buy a second hand property with a 5% deposit. I don't think as many lenders signed up to the scheme though so it wasn't so easily available. That's a problem with the lenders though rather than the HTB scheme. With both scheme's available we still chose to purchase a new build and prices have increased fairly consistently in our area for both second hand and new build properties. We also have the benefit of a 5 year warranty which we wouldn't have had with a second hand property.

Crashy_Time

anselld wrote: »

As a finance scheme it is perfectly reasonable. In fact you would be worse off if you had fully purchased at the same price without the scheme. Indeed any purchase will be painful if prices are falling.

The problem is not the finance scheme but the over-demand and under-supply of housing and peoples strange obsession with purchasing new-build when much better value can be had elsewhere.

That tends to undermine your "under-supply" argument though? People use HTB because property prices are in a bubble and they can`t afford to buy without HTB, the whole cheap credit/liar loan scam that created the bubble was also criminal and discraceful so no surprise that similar tactics were used to try and keep it all going.

kingstreet

avacapri wrote: »

didnt know that, cheers

so do you think HTB is ideal?

Ideal? No.

It is a useful tool for some people but it does have its drawbacks and as stated, an exit strategy is essential.

michelle230

It`s not just the overpricing - it`s the scandal of uncapped service charges. You are lured in with what seems fairly reasonable estimated charges - and then boom! The service charges inflate rapidly and you are trapped because you are bound by a deliberately confusing lease. The service charges are horrendous. Just google!
It is the next national scandal about to implode.
Don`t believe a word the sales office staff tell you and always use your own solicitor.

ProDave

The other "issue" with HTB is it only apples to NEW houses.

So a first time buyer buys a house using HTB.

In a few years they decide to move up to a bigger house. They put theirs on the market, and nobody comes to view it, because first time buyers only want new houses and the HTB, they are not interested in second hand ones with no HTB.

That is just speculation, I would be interested if there is any evidence that it is actually happening?

HanPop

ProDave - I have just put my 5 year old house on the market and it sold within less than a week with 3 people wanting to buy it. So not everyone who is buying a new or newish property is using the help to buy scheme.
Coincidently I am now using the scheme for my next purchase. Also not all new builds are overpriced, I’ve made £33,000 on my current house in 5 years and the house I’m purchasing is £283,000 for a 5 bed detached....can’t find anything similar for the same price in this area.

parkrunner

OP are you saying buyers shouldn't be responsible for their own actions? Anyone with half a brain cell will check other property prices and know that new builds are always overpriced. It's not as though they are going into the purchase blind.

Broadyx

We have been very fortunate with the HTB scheme, we have lived in our house for over 5 years, and if we were to sell, would make a nice profit even with having to pay the increased amount back to the govt. £192k was the purchase price, and it is now worth £265k so not every HTB ends in disaster & we couldn't have got on the property ladder when we did without it.
It pays to pick the right property though. On our estate theres only 5 3 bed detached houses and apparently they're quite in demand. That being said, I don't think any houses on our estate have gone down in value.