Boris announcement on new deposit scheme?

tim_london

Ignoring the Boris basher and generalisers, 5% is a good deal.  People who are not born with well off family for guarantors or family loan gets shafted by the system.  You simply cannot save whilst renting.  And if you are renting you are screwed if you lose your job anyway.

HTB Equity loan is a good initiative.  It gave people access to lower interest rates which makes a big difference in monthly payment and getting up to the required LTV to safeguard against negative equity.  The issue is that it was limited to new build which caused a spike in demand and thus causing a 'new build premium'.  Then there's also the complexity of the way it was structured, the HTB loan is a 'second charge' on top of the mortgage, so it is very complex to understand (extra fees to solicitors).

A 5% mortgage, where it can be applied like a normal mortgage with govt providing a fund for insurance (like Flood Re) so you don't need extra solicitor work would be a huge improvement.  If it can be used for used property it will can be a game changer.

Regarding risk/Covid/negative equity - the issue is with the presence of sub-prime lenders.  Which IMO is too blatant and that is not right post 2008 world.

Comms69

tim_london said:

Ignoring the Boris basher and generalisers, 5% is a good deal.  People who are not born with well off family for guarantors or family loan gets shafted by the system.  You simply cannot save whilst renting. - yes you can.   And if you are renting you are screwed if you lose your job anyway. - You're more screwed if you cant pay you're 95% mortgage.....

HTB Equity loan is a good initiative.  It gave people access to lower interest rates which makes a big difference in monthly payment and getting up to the required LTV to safeguard against negative equity.  The issue is that it was limited to new build which caused a spike in demand and thus causing a 'new build premium'.  Then there's also the complexity of the way it was structured, the HTB loan is a 'second charge' on top of the mortgage, so it is very complex to understand (extra fees to solicitors).- It's really not...

A 5% mortgage, where it can be applied like a normal mortgage with govt providing a fund for insurance (like Flood Re) so you don't need extra solicitor work would be a huge improvement.  If it can be used for used property it will can be a game changer. What is it you think they're offering?

Regarding risk/Covid/negative equity - the issue is with the presence of sub-prime lenders.  Which IMO is too blatant and that is not right post 2008 world.

Maybe the state just shouldn't intervene in private businesses? 

grumiofoundation

tim_london said:

Ignoring the Boris basher and generalisers, 5% is a good deal.  People who are not born with well off family for guarantors or family loan gets shafted by the system.  You simply cannot save whilst renting. Yes you can, many people do - I thought you said to ignore generalisers?  And if you are renting you are screwed if you lose your job anyway. But you don't owe hundreds of thousands of pounds. 

HTB Equity loan is a good initiative.  It gave people access to lower interest rates which makes a big difference in monthly payment and getting up to the required LTV to safeguard against negative equity.  The issue is that it was limited to new build which caused a spike in demand and thus causing a 'new build premium'.  Then there's also the complexity of the way it was structured, the HTB loan is a 'second charge' on top of the mortgage, so it is very complex to understand (extra fees to solicitors). It's not that complex.

A 5% mortgage, where it can be applied like a normal mortgage with govt providing a fund for insurance (like Flood Re) so you don't need extra solicitor work would be a huge improvement.  Will it? Or will it, as with help to buy, often be used by people who don't actually need it. This will push prices up meaning those who can't currently buy aren't really helped?
If it can be used for used property it will can be a game changer. Yes it will make property prices much higher. 

Regarding risk/Covid/negative equity - the issue is with the presence of sub-prime lenders.  Which IMO is too blatant and that is not right post 2008 world.

For some who wants to ignore generalisers you make a lot of generalisations.

By definition someone who cannot save while renting (which according you you is everyone) is unaffected whether mortgage deposits are 5% or 25%.

Gycraig

People slating the 5% deposit as a bad idea. My house was 138k I put 14k down, under current scheme I could of put 7k down and moved in a year earlier, meaning I would have had my mortgage 100 quid cheaper than my rent and could also still put the 5-600  a month a side I was putting aside when saving for my mortgage. 

I don’t understand how waiting another year paying a higher rent than my mortgage would help protect me in anyway. 

Obviously does depend on interest rates but if people are sensible the sooner they can buy a house the better generally 

Comms69

Gycraig said:

People slating the 5% deposit as a bad idea. My house was 138k I put 14k down, under current scheme I could of put 7k down and moved in a year earlier, meaning I would have had my mortgage 100 quid cheaper than my rent and could also still put the 5-600  a month a side I was putting aside when saving for my mortgage. 

I don’t understand how waiting another year paying a higher rent than my mortgage would help protect me in anyway. 

Obviously does depend on interest rates but if people are sensible the sooner they can buy a house the better generally 

There is no 'current' scheme. But you are looking at only one factor. 

theoretica

Any scheme that makes it easier to buy a house that would otherwise be unaffordable may cause problems if it does not apply to potential purchasers when that buyer comes to sell.  If FTB (or indeed anyone) buys a house, with whatever help, and then when they want to sell it their house is not affordable to people like they were when they bought who will their buyers be?

Gycraig

It’s quite obvious when I said “current scheme” I meant the one that the thread is talking about ...

feel free to enlighten me on how renting someone else house and paying someone else’s mortgage for another year is a safer option

Comms69

Gycraig said:

It’s quite obvious when I said “current scheme” I meant the one that the thread is talking about ...

feel free to enlighten me on how renting someone else house and paying someone else’s mortgage for another year is a safer option

If you lose your job, you aren't going to face a repossession which will ultimately destroy your credit history. Additionally you wont be liable for any massive repairs that may come up e.g. new roof. You also arent tied down in an unstable economic climate to a single area... But you know that's looking at the bigger picture

kinger101

Comms69 said:

The govt has zero say in this. Frankly anyone buying with a 95% mortgage needs their head examining. 

I disagree.  It's not ideal but the danger of someone wanting to buy anything in London, Oxford or Cambridge with a 10 % deposit has been house prices have running away from them in recent years.  

tim_london

Comms69 said:

Gycraig said:

It’s quite obvious when I said “current scheme” I meant the one that the thread is talking about ...

feel free to enlighten me on how renting someone else house and paying someone else’s mortgage for another year is a safer option

If you lose your job, you aren't going to face a repossession which will ultimately destroy your credit history.
Not keeping up with rent is also disaster to credit report - either way that's a mark for 6 years.
Additionally you wont be liable for any massive repairs that may come up e.g. new roof.
What about liability of being kicked out on a whim of landlord or rent increase?
You also arent tied down in an unstable economic climate to a single area... But you know that's looking at the bigger picture.  Stability of owning a home is not bigger picture?

Look - I would agree it was pre 80s, council house and fallback to housing benefit.  But not today with private rental situation especially with big cities.  I would love to see a govt bring that time back but it ain't happening.

It may benefit only a small % of people, most likely those above average wage.  But it does help.