Need some unbiased advice please

parabol64

Hi everyone.
My partner and I have been granted a 30k loan from the goverment, and we have six weeks to find a house and make an offer.
(My parnter works for the NHS.)
My question is -
considering the market's stagnation, is this still an unmissable opportunity? The loan is payable when we sell the property.
If we buy now, we'd buy a nice two bed flat in a nice area. We'd probably outgrow the flat in 4-5 years. My concern is that by that time, we'd probably want to move to a bigger house. If prices will (as some predict) go down however many precentages, we'd be a bit buggared cause we wont be able to rent out that property and move on to another.
Considering the current market's conditions and forcasts for the future, is this loan something we shouldnt miss? (We wont be eligible for it next year, or ever again).

Thanks in advance for your help.

rozeepozee

The cost of housing is such a hot topic and emotive subject - everyone has an opinion so I stress this is just my view.

If the cost of housing goes up, then the next house you buy will be more expensive. If the housing market goes down, by the same token, the next place you buy will be cheaper. Ultimately, as long as you can pay your mortgage and you don't have to sell, I believe the housing market will continue its upward trend in the long term. On average, houses have doubled in price every decade. I would be cautious about any scheme that restricted my options about what I could do with my own property. This sounds like the case with this scheme. And you are thinking of moving in the medium term (4 to 5 years) when the housing market could be in a slump. If housing costs dropped sharply and you had to move at a time when you were in negative equity, you could at least rent out a flat you owned without any conditions attached whilst you lived somewhere else. Find out what would happen if you fell into negative equity. Check the small print of the loan and its restrictions. I appreciate if the goverment is giving you a loan, house prices in the area you want to live may be beyond your reach, but you say the laon will enable you to purchanse a two bed flat. If it were possible I would aim to buy a smaller flat without the loan or a 2 bed place in a cheapper area.

parabol64

I can imagine that if for some reason I HAVE to move out in five years when the markets is down, say, %30, the goverment would not force me to sell and leave me in negative equity. (If they'll do such thing, I'll sell my story to the Sun and cover my losses). So I guess there is some kind of assurance there.
Like you said, I need to investigate the fine print of the conditions for the loan etc.

Thanks for your help.

DrStep

Its the case of the goverment proping up the property market - look at it from outside the box and ask yourself this - Has the goverment been able to successfully prop up any market in the long term??

The answer is no i believe, as market forces are bigger than the influence of any goverment (unless you believe the conspiracy theroies)- its like asking is David Beckham bigger than Manchester Utd? Of course he wasnt.

If you feel however that circumstances are that you cant wait and the loan looks like a good idea - then buy for the right reasons.

Fairdo_2

The scheme you have mentioned is the Key Worker Home Start Initiative scheme and it offers you assistance on a "Shared Equity" basis.

There are down sides to the scheme. Your partner would need to stay with the NHS, there are limits to alterations you can make to the property (or you wouldhave to seek permission at leat), but a positive side to this scheme is that you are not paying interest on this loan. Instead you would be expected to "buy" that share from them at the current price at that time. If the property market crashed, they would not expect you to pay them back their original investment. It would obviously be bad enough as your equity would have dropped, but at least they would not compound it by asking for their investment to be covered.

parabol64

I need to research the scheme a little more.
I'm not sure what happens if we breach the terms of the contract.
Say my partner quits the NHS, are we supposed to sell the house and move out, or can we just pay the government back?
Can we buy a second propery?
etc.