Help to Buy Equity Loan - Scandal

Yalpsmol

For HTB you put 5% property value down as deposit. Why would you even want shared ownership if you could afford the deposit for a 95% mortgage or HTB?

Yalpsmol

New rule coming in or new rule in? Different things. Probably easier to stick to your original thread

jaxkesa

As someone who has used Help to Buy, I find it hard to believe the OP could think they only needed to pay back 20% of the original purchase price and would be interested to know who all the others are who apparently also feel that way.

It's not like it's some clause buried deep in the (not extensive) terms and conditions.

I've just looked over my paperwork from a few years ago and it seems quite clear.

In my Personal worked example:

REPAYMENT OF THE EQUITY MORTGAGES

If you decide to redeem the equity mortgages you will pay back 20.00% of the market value. If you decide to sell then you will pay back 20.00% of the market value unless the sale proceeds are greater in which case you will have to pay back 20.00% of the sale proceeds.

There then follows 4 paragraphs explaining in detail exactly how much would need to be paid back based on 2 different scenarios.

Then in my Authority to Proceed, in bold it states:

SO, FOR EXAMPLE, IF THE HOMES AND COMMUNITIES AGENCY INITIALLY PROVIDED A 20% CONTRIBUTION, THE REPAYMENT WILL BE 20% OF THE TOTAL VALUE WHEN IT IS SOLD OR WHEN REPAID IF EARLIER.

ACG

I wont lie, I am not a fan of HTB equity loan mortgages. I took the business decision to not offer them as I genuinely believe people do not understand it properly and I can see there being a lot of complaints down the line (justified or not, I do not want the headaches).

You wont be alone because you wont be the only one who did not read the paperwork and/or listen when it was being explained to you. You were probably more concerned about the extras included than you were the details of the scheme - that is not a dig, it is just a fact of life of the world we live in.

But, as kingstreet says, you were provided paperwork and a personalised illustration that you clearly did not read or understand. You are right people do not read the T&Cs of everything, but at the same time it is not every day you go out and spend £100,000+ on something.

grumiofoundation

JimmyDC wrote: »

Hello. Well, this seems to have started a storm. Thanks for your replies, it seems that the majority believe that Help to Buy equity is perfectly fine and that it's ok for the government to profit from uk.

Would you have been able to afford the property without HTB? If not - then you have profited as well. Sell the house, you have more money than when you started. You say you want to stay in the house. Therefore you have an interest only mortgage for 20% of the original purchase price. It has been explained to you how to pay this off.

JimmyDC wrote: »

I'd be interested to know if that was your view on other matters that directly affect you. I take your points and appreciate the feedback. I'd be interested to know the average age is here. Likely you all have "worked hard all your lives" and "paid your taxes". I'm particularly offended by the comment about "typical younger generation" which highlights one of the many problems. Ask yourself what the average house price was when you got on the property ladder and compare it with the average wage, the increase hasn't gone up in proportion. This makes it very difficult to buy for younger people, hence why the average first time buyer is now 30. So take your grumpy self entitled rubbish elsewhere.

Interesting you are annoyed at a sweeping generalisation and then make one yourself.
I am under 30 and have only paid one year of taxes. However I still find you attitude ridiculous. We are a generation that has all the information you could possibly want at our fingertips and get people still seem to manage not to be able to read this and then complain. Are you surprised that some 'older people' get annoyed at this?

JimmyDC wrote: »

I take your point in reading the contracts fully, but have you every read the entire T's & C's of everything you sign and did you fully understand each article? I understood I was borrowing money and that there would be interest, I misunderstood that the percentage increased with the house value.

If I am making the biggest financial decision of my life you bet I will. Also this isn't a small print T and C buried on page 98, this is so clearly displayed.

JimmyDC wrote: »

I'm not complaining the house value has gone up, but I don't want to move, the house is my home and I want to stay here. The increase in value has meant that what I thought I was buying my property for was false because realistically, to fully own the property I'd be paying a much bigger deposit than if I'd just taken out a separate loan for the deposit.

I wonder what loan this would have been, a mortgage perchance? If you were eligible for a 95% mortgage why didn't you take this out? If you could have bought the house without help to buy and you chose not to then you only have yourself to blame. If you couldn't have got this mortgage then this alternative doesn't exist.

JimmyDC wrote: »

In 2 years time I'll have to pay interest and those payments are purely on the interest, not to reduce the loan. We are also not allowed to pay the loan off in partial payments so we can't slowly reduce what the government owns. In most private equity loans, you can. So this to me is a method for the government to keep a hold of the value of my house. That is, in my opinion, the scam. Had I been able to slowly pay back what I'd borrowed, the amount I'd have to pay back would have been much lower. Currently, the amount I have to save up to avoid paying interest has gone from about £34k to £42-45k. A loan at 5% would have cost me about £8500 in interest. I likely will have to remortgage, I appreciate your advice on that one and for your explanation. It was genuinely helpful and has put me at ease.

No in 2 years you will CHOOSE to pay interest. Presumably you already have a plan to repay the 34k, therefore you have 2 years to save up 8-10k. You can pay off the 34k and then you pay interest on much less.

You need to look up what SCAM means. You didn't read what you were signing and now you claim you have been scammed.

JimmyDC wrote: »

To other comments, I started the thread to seek advice, not to invite a bucket load of insults and trolling from people with nothing better to do than grump about young people. If you have anything constructive to add or information or advice, I'm all ears but please keep ignorant stereotypes and generalisation to yourself.

My genuine advice would be to sit down and work out the impact that buying your property has had on your finances. Compare this to, for example, if you had needed to rent for 2 years, if you had needed to buy a smaller property which you would then have had to sell. Then work out if you are in a better position than if HTB hadn't existed. This might make you feel better about it.
Hopefully you have now learnt to read Ts and Cs and not to sign something you don't understand. You wont make this mistake again, count yourself lucky, some people learn this after they have lost their all pension or had their identity stolen!