Should we get a Help to Buy?

DestinyGamer

We've been renting ever since we left home and been unable to save more than £5-£10k. I've always been dead set against Help to Buy but there are SO MANY new builds being built all over my local area and they are starting to look rather appealing.

Should we stop wasting our time renting and not saving and just do it? Go speak to someone? Or would we be heading for a hole in the pocket?

Getting_greyer

Depends on your income and how much rent you pay now I guess.  

For all there ills they allow people stuck in high rent strugglung to build a deposit to be able to buy now and defer payments of the loan till later on.  When looking at total paid over lifetime it may be cheaper to stay away from HTB, but in the real world the numbers that matter is monthly payments vs rental payments.

You may also be able to get a discount on a new home with the First Homes scheme if you have a local link/keyworker.

[Deleted User]

Getting on the housing ladder should be a priority. Prices will keep rising and you may never get on if you don't take the opportunities available to you.

HTB might work out, it often just results in more expensive new builds though so do some research.

Also check into the builder and be aware that new builds often have a whole range of their own issues so you need to do your homework.

Runningmad

Go for it! We have been renting for 25 years, finally able to save for a deposit but prices in our area are crazy. HTB is the only way we can buy. The mortgage is cheaper than rent and it's an investment. Go and look at some developments and see how you feel. Any questions, I can try and help. 

anjyeah

I am on the process of checking out these equity schemes - SO vs HTB - at present as it's the only path for me as a single earner in London. 

One of the lessons I learned earlier on is to research one that is easy to cope up with (MSE, other homebuying websites) because I found the initial overload of information quite overwhelming. Gather your own facts, income, deposit, debts, etc. And the one thing that put all those information in perspective is from a mortgage broker advice - there is a thread on here that might be a good read, but I also went with one that was recommended by a friend. 

It is tempting but as soon as you are comfortable with all the information you get, I would say go for it too. Good luck! 

katkatmachine

Our lender did not give us a high LTV hence we took out HTB. We were hesitant at first but there’s no other choice, that’s the only we we could get onto the property ladder. In the end, it all worjed out. Had we waited to save more, we would not be able to buy a house now due to prices skyrocketting. 

Anyway, if you go with HTB make sure you have a plan how to pay it back, either by remortgaging or paying it in full. We plan to fully pay ours in year 4. Fingers crossed! 

All the best to you. 

Belleofthebooks

HTB is not for everyone but it worked well for me. 

With HTB you only need 5% deposit. They provide 20% of your deposit so your mortgage is 75%. This gives you a much better rate on your mortgage meaning lower monthly payments. 

You only start paying off your loan after 5 years. So in theory you have 5 years to save money to pay this off. Your options after 5 years are;

1. Save up during those 5 years and pay if all off.
2. Remortage after 5 years and buy help to buy out.
3. Start paying monthly payments from year 6 with interest starting at 1.75%. 

For me it was worth it because even if I paid it off in monthly payments it would STILL be cheaper than renting. In fact I wouldn't be able to afford the rent on the house I have now in the area I live. 

Obviously you need to do your sums and work out if it would be worth it for YOU. Depends how much the houses are, how much HTB loan you would be borrowing, how much interest you would pay off after the 5 years etc etc

kingstreet

To clarify re the HTB equity loan;-

after five years you make payments of interest (or fees as they are known) based on 1.75% of the original loan amount you repay no capital
you must repay the HTB loan on the sale of the property; at the end of the mortgage term; or in 25 years (whichever is the shorter)
you can repay voluntarily at any time in one or two lumps of 10% or 20% of the then property value (outside London).

DestinyGamer

Thank you all for your excellent advice. You've really helped me out. I'm just going to fill in some blanks and answer some questions.

Getting_greyer said:

Depends on your income and how much rent you pay now I guess.  

You may also be able to get a discount on a new home with the First Homes scheme if you have a local link/keyworker.

We rent privately at £625 p/m 

My partner is full-time (retail management 40+ hrs) and earns the well. I'm part-time (25-35hrs p/w) and a keyworker (food).

Other than my student debt neither of us have any other debt or bad credit. 

[Deleted User] said:

Getting on the housing ladder should be a priority. Prices will keep rising and you may never get on if you don't take the opportunities available to you.

Also check into the builder and be aware that new builds often have a whole range of their own issues so you need to do your homework.

When you say builder do you mean the company? Near us there is Orbit homes among others.

Runningmad said:

Go for it! We have been renting for 25 years, finally able to save for a deposit but prices in our area are crazy. HTB is the only way we can buy. The mortgage is cheaper than rent and it's an investment. Go and look at some developments and see how you feel. Any questions, I can try and help. 

25yrs is a long time! I hope you find somewhere soon. House prices going up is what worries me most. Rent is also going up. Currently we are one of the cheapest on our street with other renters paying between £750-£1000 p/m. We dread the new contract fearing a hike in our rent but luckily our landlord hasn't as yet. 

anjyeah said:

one thing that put all those information in perspective is from a mortgage broker advice.

It is tempting but as soon as you are comfortable with all the information you get, I would say go for it too. Good luck! 

Thank you 🙂 Our landlord is a broker but there maybe a conflict of interest there. My sister has a good one she can recommend.

I think you're right. Once we have all the information we can get we need to speak to a broker first.

katkatmachine said:

if you go with HTB make sure you have a plan how to pay it back, either by remortgaging or paying it in full. We plan to fully pay ours in year 4. Fingers crossed! 

All the best to you. 

Thank you. I assume that a plan would be made with the broker? Or did you work it out yourself?

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Thank you to everyone else for the solid advice. This thread will really come in handy.