Help to Buy Equity Loan vs. Standard 90% mortgage

l_f_w

Hi!

I am a 29 year old Female, currently renting in Zone 2 East London (4 bed house share with friends in Bow/Mile End/Victoria Park area). My base salary is £53K, with a 5-20% bonus per year and yearly % pay rises.

I'm at the stage in my life where I would like to have my own place which I can make my own home. Most of my friends live in east so I'm keen to stay in this side of London but can't afford to buy in my current area.

I'm looking at Leyton/Leytonstone and Walthamstow as more affordable areas with good tube links. As well as Bow and Stratford.

I've got two routes, which I'm hoping I could get some advice on. For context, I have £25-30K for a deposit and another £8-10K to cover all other fees and furnishings etc (although I wouldn't buy everything at once and I will try and find second hand bits on FB marketplace where I can):

1) Help To Buy - 1 bed new build for £375K - £400K.

2) Standard 90% mortgage route - 1 bed for budget of aprox £270-310K.

I have read some not very good stories about HTB on here. My main concern going down that route is going into negative equity when it comes to selling. I think I would stay there for 3-4 years max, so not a lot of time to build up equity. The prices of HTB new builds are already inflated and I don't want to be in a place where I can't even break even.

On the flip side, if I get an older property for £270-310K, there may be issues that I have to pay for and I won't have a lot of cash in the bank left after paying for all the costs of buying/moving.

ANY help of advice would be much appreciated! Has anyone bought a new build in Leyton and made money / broke even. I have seen some on rightmove records saying people have but would be great to hear from someone directly!

AFF8879

If you know you’re only going to stay there three years then my strong preference would be option 3) none of the above, and definitely not a HTB new build. You’ll end up losing money even without negative equity either way in terms of paying 2 sets of legal fees, SDLT on the next purchase etc.

Where do you see yourself living in 3-4 years? I would aim for that as my first time buy even if it means another year or two renting. I wouldn’t worry about runaway house prices in east London, though I might do if I was looking to buy in the suburbs/Shires, so if that’s where you were thinking of as a next step I would just cut out the London flat and go straight for that. 

And I say this as someone who owned a 1 bed flat in Bow before selling and buying a house in Hampshire in a similar timeframe to what you’re proposing... No regrets per se but it would have been much easier (and cheaper) to just skip straight to the house.