Help to Buy in 2020

lukeluke92

Hi MSE Members,

I would like to find out what the general consensus on Help to buy in 2020 is please. (bad idea?, good idea? no idea?)

For some background, I am 26 years old with a good salary for my age (58k). looking at houses around the 300k mark, i am closing in on my 5% deposit. which would (from looking online) allow me a mortgage around the 800 - 1000 range per month range.

I have done everything in my power to save as much as possible (LISA, moved in with family, cut all bills etc etc)

is it better to go online for mortgages these days, or pay a mortgage adviser to assist in these matters?

there are also many forms of insurance I have heard about that come hand in hand with houses. are these all necessary? if not, which ones are?

I want to know, in my position now, is there anything I should be considering prior to making a move on a house, is there any advice i should here before delving into all this properly?

any information that helps me is, as always. greatly appreciated.

thank you!

Exodi

There's a lot of threads on this forum about the Help To Buy Equity scheme.

I wonder if you're aiming too high though. £300k less 5% deposit is £285k mortgage (well in combination with HTB) which is over 4.9x your income. Most lenders I see usually cap out at around 4x - 4.5x.

MSE often recommends London & Country - they're a completely free mortgage broker and I used them for my last purchase hassle free. Maybe run affordability past them?

h240

Hi, myself and my husband are currently going through getting a mortgage and using help to buy on a newbuild house worth £350,000 personally for us it’s a good idea as this will be our home for a long time and it’s a house we really want. I would advise to get in touch with a good broker and go from there they do everything for you so takes away a lot of the stress when applying. Our broker is who the developer uses as we had to be qualified by them before reserving the house so we just stuck with them and they are free to use which is good. They found a good fixed rate deal just waiting on the offer now, they also did all the help to buy for us and we got approved as they do it all the time it’s been great to use them. I know a lot of people are against help to buy but for us it has been able to help us get a bigger house for our growing family and it’s a big step up. Hope this is of some help for you. No good with the insurance bits I’m afraid!

h240

With help to buy it’s x 4.5 your wages. That’s what it’s been for us as we are going through the process now. We also have put down more than 5% deposit as the broker said that would be the only way it could work and that’s helped.

Exodi

Sorry, to answer your insurance question: the two common insurances are buildings and contents - quite often you can get both as one product.

Most mortgage lenders will REQUIRE you to have buildings insurance on the property when you exchange. I bought my house for £290,000 with a similar income to you and my buildings and contents insurance is less then £30 a month FYI.

Please make sure you've also got at least a few thousand put aside for surveys, conveyancing, searches, etc.

EDIT:

h240 wrote: »

With help to buy it’s x 4.5 your wages. That’s what it’s been for us as we are going through the process now. We also have put down more than 5% deposit as the broker said that would be the only way it could work and that’s helped.

That's interesting.

lukeluke92

Thanks for the hasty replies!

Perhaps I have this completely and utterly wrong, Wouldn't the mortgage be minus the equity loan? aren't they two seperate things entirely?

Effectively, taking a 20% equity loan and adding a 5% deposit is 25% so wouldn't that leave me with a mortgage requirement of 225K on a 300K house?

Or am I living in a dream world?

Exodi

lukeluke92 wrote: »

Thanks for the hasty replies!

Perhaps I have this completely and utterly wrong, Wouldn't the mortgage be minus the equity loan? aren't they two seperate things entirely?

Effectively, taking a 20% equity loan and adding a 5% deposit is 25% so wouldn't that leave me with a mortgage requirement of 225K on a 300K house?

Or am I living in a dream world?

They are two separate things and your example above is correct - I was more indicating a lenders possible reluctance to lend to someone that is diluted more than the typical borrower.

h240

They are two separate things yes, we’ve got a 20% equity loan so the house is worth 350K, government are lending 70K we are putting down 25k and mortgage is for 255K if that helps?

Thrugelmir

lukeluke92 wrote: »

Thanks for the hasty replies!

Perhaps I have this completely and utterly wrong, Wouldn't the mortgage be minus the equity loan? aren't they two seperate things entirely?

Effectively, taking a 20% equity loan and adding a 5% deposit is 25% so wouldn't that leave me with a mortgage requirement of 225K on a 300K house?

Or am I living in a dream world?

Longer term how do propose repaying the equity loan?

lukeluke92

This is very helpful information,

I understand I am on the back-foot with small deposit and being a solo buyer.

Is this simply a case of I will need to save further that the planned 5%.

Unfortunately, in my area there aren't many houses for less than 300k!

lukeluke92

I would pay the equity loan as soon as possible. ideally saving alongside the living expenses until i had a lump sum.