Help to Buy - Do you regret it?

Celes

Hi All, 

Buying a new build help to buy flat this year. In motion but not exchanged yet. 

I've become obsessed with house price and the economics of Help To Buy as well as newbuilds, plus the challenges to first time buying in London without it. 

I know there is talk of both a premium for a new build, then evidence of extra premiums on top for those that go through help to buy. Whether London property even has any rise left in it, are we at the top of the market...

The issue really about whether in 5 years time when the 0% interest ends in 5 years, will I be in negative equity ... and if so, how much. Does this matter if that there was no other way for me to do it (and how cheap the money is at 0%) ... or if I'm deluding myself.

I'm convincing myself it won't matter if the property just stays the same in price in 5 years, so no increase in inflation but not losing me money either. But of course if the London bubble ends (for the non-luxurious top end) and there is any dip, ontop of my premiums ...

Has anyone experienced this in practice? 
Did the property drop in value? If so, by how much. 

diggingdude

remember if property price drops so does the 20% you owe

jimmyjammy001

diggingdude said:

remember if property price drops so does the 20% you owe

Shame the other 80% won't! 

SophieHull

We aren't in London but our apartment bacame "unmortgageable" according to surveyors. We couldn't sell to a cash buyer as we'd be in negative equity so we would move into parents and rent it out as an only option to get out of there. Our RICS surveyor valued it £35000 less than its original value. We sent our redemption in 9 months ago and have now gone over the 5 year mark so they are asking for interest payments. So yes. Massive regrets would never recommend help to buy to anyone. 

Bowley

I’m not in London, but we did help to buy as first time buyers.

We’re selling up and moving on now, we will have been here 5 years in August.

We’ve sold for £15,000 more than we paid. 

Valuation matched the purchase price, had our redemption statement through today.

JTW73

Nope don’t regret it at all. It helped us get the bigger property we needed at that stage of our lives. Even paying the interest payments as we have for a year now has been cheaper than a bigger mortgage. Yes we’re now paying back more than we borrowed now we’re selling but we’re still walking away with the equity we would have done if we hadn’t used it. 

I’d use it again if they changed their minds and extended it.

[Deleted User]

Im thinking about this for my son. In London its a 40% loan and 60% purchase. We are kind of hedging our bets and only taking a 60% risk on the prices falling rather than 100%

Of course though the new builds have not only a new build premium but a HTB premium as well. 

Double edged sword. Im still not convinced either way right this moment ! 

lexihayes

This is something my OH and I have been considering - but being in London + the new build premium for the sq footage its a joke!

amnez

No regret.

I think Help to Buy gets a bad rap on here but it’s a great solution for many people who would otherwise not be able to get on the ladder. I believe the key is financial responsibility/discipline which is an individual quality. To use myself as an example; I took the lowest possible loan amount and worked out the numbers with an intention of paying it off by the end of the 5 year period. So I still have a ‘house deposit’ fund paid into a high interest account to grow my payment. Any house price decline would be to my advantage; and if there is house price increase I would be participating in that based on the amount of personal equity I contributed. Seems fair to me.

I also think the new build hate in the U.K. is a bit shortsighted. Granted there are disadvantages with leaseholds and service charge but for some the benefits outweigh. I wanted to buy off a developer as a first time buyer because I didn’t want to deal with a chain; wanted a brand new place that hadn’t been lived in and didn’t want to fork out money for structural redecoration. I also don’t want to deal with building upkeep even though I have a small terrace garden and really wanted a 2 bed 2 bath.

As for the premium, it’s up to buyers to negotiate pricing down, especially if you’re not looking at a forever home. Don’t compromise on that and buy for list price however much you want the place; there’ll always be another. It doesn’t help to live in a society that advocates home ownership (and really you don’t truly own till you’ve paid off your mortgage)  as soon as possible but criticises every form of government support provided to the youth.

Best of luck with your prospective purchase.

PJBRFC

We used Help to Buy to purchase our first home. We hit the five year mark in December and sold it in April. 
We ended up paying back £6000 more as the price had increased but this, of course, meant we still walked away with good equity. I do believe that builders have increased prices to take advantage of the scheme, but that is no fault of the scheme itself.

I think the core issue is that people use the Help to Buy with absolutely no thought about how they will pay it off. Remember after 5 years you are only paying back the interest, you will still need to pay back the loan itself by the 25th year. So make sure you have a long term means to cover the loan, whether that's by remortgaging to incorporate the loan or saving and paying it off later. 

GixerKate

I've been keeping an eye on this thread as I'm also going through the process of buying a new build using H2B, just wanted to say thanks for posting, its great reading this!