Does this logic make sense for a first time buyer?

Ybe

Does my thinking sound reasonable or is it flawed anywhere?  

I had thought about going for help to buy or shared ownership in London to buy a first property. However, I’m pretty sure that within the next 2 years, I’ll get a pay rise and be able to build up a bigger deposit which would put resales more easily within reach, assuming property prices don’t increase dramatically in the next 2 years. I thought this would be a better option than to a buy a very inflated help to buy new build or pay increasing rent on a shared ownership property. Looking at help to buy and shared ownership, I think it would make it very difficult for me to pay off the equity loan or buy 100% of the property any time soon due to how much more expensive these properties are compared to resales. 

My thought is that with a normal mortgage and staying within what’s affordable, I can have a more comfortable life without having to worry about how to own the property outright (I.e. how to pay off the large equity loan or how to staircase to 100%) 

Salemicus

This sounds reasonable, yes, but it also has flaws.

The first flaw, as you rightly note, is that if property prices increase significantly, you could be even further away from your goal. The second flaw is that you will still need to live somewhere in the intervening period, and if your rental costs are high, then again it won't bring you closer to your goal.

Ultimately, every plan is flawed, because it's a dynamic market and there's no foolproof path to take. But I followed something very like your plan myself.

Ybe

Salemicus said:

This sounds reasonable, yes, but it also has flaws.

The first flaw, as you rightly note, is that if property prices increase significantly, you could be even further away from your goal. The second flaw is that you will still need to live somewhere in the intervening period, and if your rental costs are high, then again it won't bring you closer to your goal.

Ultimately, every plan is flawed, because it's a dynamic market and there's no foolproof path to take. But I followed something very like your plan myself.

Can I ask how did it work out for you? Do you think you made the right decision be using a buying scheme? 

Ybe

Instead of using a buying scheme*

Salemicus

Yes, it worked out well for me, and I definitely think I made the right decision. Buying in London is expensive enough as it is without paying extra for an overpriced new build, and I regard shared ownership as a trap.

But just because it worked for me, doesn't mean it will work for you. The next few years may well be very different, no-one has a crystal ball.

Ybe

Salemicus said:

Yes, it worked out well for me, and I definitely think I made the right decision. Buying in London is expensive enough as it is without paying extra for an overpriced new build, and I regard shared ownership as a trap.

But just because it worked for me, doesn't mean it will work for you. The next few years may well be very different, no-one has a crystal ball.

Help to buy seems like a trap too to me. Interest free for 5 years but then quickly increasing interest rates and a huge lump sum to pay or remortgage. 

Ybe

The issue is that because of how expensive the London market is, with help to buy, I’d have to take a six figure equity loan. Which is a huge figure to repay on top of the mortgage.