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  • FIRST POST
    • Former MSE Helen
    • By Former MSE Helen 23rd Mar 11, 9:27 AM
    • 2,324Posts
    • 971Thanks
    Former MSE Helen
    Budget 2011: First time buyers to get help buying new builds
    • #1
    • 23rd Mar 11, 9:27 AM
    Budget 2011: First time buyers to get help buying new builds 23rd Mar 11 at 9:27 AM
    This is the discussion thread for the following MSE News Story:



    Last edited by MSE Guy; 23-03-2011 at 1:07 PM.
Page 1
    • regbrown
    • By regbrown 23rd Mar 11, 12:22 PM
    • 70 Posts
    • 135 Thanks
    regbrown
    • #2
    • 23rd Mar 11, 12:22 PM
    • #2
    • 23rd Mar 11, 12:22 PM
    so very similar to homebuy direct? which as most smart folk know is a awful system to keep new homes at stupidly inflated prices. I went into a newbuild office and was told 2 prices, one for HBD and one for open market. as usual this is what happens when policy is formed purely on business interest, any first time buyer with experience would know these schemes are not good. you overpay for a house that is above real world pricing so when you come to sell your at a disadvantage.

    plus we would just quite like new builds to just be priced reasonably. that's the experience in my area anyway.
  • CloudCuckooLand
    • #3
    • 23rd Mar 11, 1:07 PM
    • #3
    • 23rd Mar 11, 1:07 PM
    What a great scheme - get a 75% mortgage and a 20% loan to buy 75% of a house...what could possible go wrong ?

    There is a reason the banks do not offer 95% mortgages...
    Act in haste, repent at leisure.

    Its a serious financial transaction and one of the biggest things you will ever buy. So, stop treating it like buying an ipod.
    by dunstonh
  • muhasib
    • #4
    • 23rd Mar 11, 3:27 PM
    • #4
    • 23rd Mar 11, 3:27 PM
    CCL - The scheme is shared equity, not shared ownership so the buyer will have legal title to 100% of the property.

    regbrown - In my block, one 2009 Homebuy Direct property was sold again in Dec 2010 for £10k above its new price (as on Land Registry) so they don't all get sold for above 'real world pricing'.

    Take a step back and realise we are funding the government 10% equity loan by a levy on banks to cover that % the bank won't lend to the purchaser, another case where the money just gets recycled in a different path to the same ends as before.
  • CloudCuckooLand
    • #5
    • 23rd Mar 11, 3:32 PM
    • #5
    • 23rd Mar 11, 3:32 PM
    Indeed, you may get to "enjoy" 100% responsibility for maintenance and upkeep etc.

    But if house prices rise over 5 years, will you get more than 75% of the increase in equity ? If you are sharing the equity, its not a flat £ amount loan. Its a %...

    So developer and Govt benefit from your "own" 100% legally titled asset appreciating.
    Act in haste, repent at leisure.

    Its a serious financial transaction and one of the biggest things you will ever buy. So, stop treating it like buying an ipod.
    by dunstonh
  • muhasib
    • #6
    • 23rd Mar 11, 3:59 PM
    • #6
    • 23rd Mar 11, 3:59 PM
    The devil is in the detail with the new scheme but with HBD you get the appreciation of your equity %. Of course you don't start paying interest on the rest for 5 years and may have the benefit of a lower interest rate on your own mortgage as you are borrowing less of the total transaction cost.

    If house prices fall over 5 years then you would lose less than if you had 100% - this 'benefit' falls on the government and developer.
    • dimbo61
    • By dimbo61 23rd Mar 11, 4:04 PM
    • 10,252 Posts
    • 5,561 Thanks
    dimbo61
    • #7
    • 23rd Mar 11, 4:04 PM
    • #7
    • 23rd Mar 11, 4:04 PM
    interesting that the interest will rise in year 7 by the RPI plus 1% rather than the CPI which the government now seem to be using to set pensions,benefits ETC
    • regbrown
    • By regbrown 23rd Mar 11, 4:09 PM
    • 70 Posts
    • 135 Thanks
    regbrown
    • #8
    • 23rd Mar 11, 4:09 PM
    • #8
    • 23rd Mar 11, 4:09 PM
    if the housing developers admit they charge one price for HBD and another for non HBD then its obvious that they are inflating the prices on the schemes.

    of all of the new builds I have seen, they are all far above the average price in the area. as one of the sales women (always seemed to be women!) said its like buying a new car, you pay for the privilege.
    • Senior Paper Monitor
    • By Senior Paper Monitor 23rd Mar 11, 4:13 PM
    • 2,875 Posts
    • 1,711 Thanks
    Senior Paper Monitor
    • #9
    • 23rd Mar 11, 4:13 PM
    • #9
    • 23rd Mar 11, 4:13 PM
    Its certainly "just like buying a car" - worth considerably less as soon as you close the door and make yourself comfortable in your new possession !
    Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam
  • muhasib
    if the housing developers admit they charge one price for HBD and another for non HBD then its obvious that they are inflating the prices on the schemes.

    of all of the new builds I have seen, they are all far above the average price in the area. as one of the sales women (always seemed to be women!) said its like buying a new car, you pay for the privilege.
    Originally posted by regbrown

    Or that they are pricing in the cost of providing a loan of 10% of the equity at 0% for 5 years and increasing at an indexed rate starting at 1% after that.
  • Gemmzie
    if the housing developers admit they charge one price for HBD and another for non HBD then its obvious that they are inflating the prices on the schemes.

    of all of the new builds I have seen, they are all far above the average price in the area. as one of the sales women (always seemed to be women!) said its like buying a new car, you pay for the privilege.
    Originally posted by regbrown
    Locally, we don't seem to suffer from this problem, but then house prices are very high in comparison with other areas anyway.

    I'm not sure about this scheme, the funding stream is a good idea but surely it would be better to put pressure on the banks to lend at a fairer level rather than complicating things further?

    We are (hopefully) buying a shared equity property and the paperwork is far too complicated.
    No longer using this account for new posts from 2013
  • tyler80
    Compare and contrast - 4 bed 'townhouses'
    http://www.rightmove.co.uk/property-for-sale/new-homes/property-27313798.html Shared Ownership £173,950

    http://www.rightmove.co.uk/property-for-sale/property-16741341.html?premiumA=true Open Market £130,000

    http://www.rightmove.co.uk/property-for-sale/property-32501129.html Open Market £154,995
    Last edited by tyler80; 23-03-2011 at 7:32 PM.
    • regbrown
    • By regbrown 23rd Mar 11, 8:05 PM
    • 70 Posts
    • 135 Thanks
    regbrown
    it is kinda nuts that the banks deems FTB are higher risk, so their solution? charge us a good % more on the loan and increase the chance of us defaulting! a bit tongue in cheek as sensible lending is important etc etc

    dont they also miss the obvious point, banks dont give the same rates on shared equity mortgages... so you cant take advantage of the going rate. of course it has been 6 months since I looked at HBD but back then there were a handful of places offering 2 year fixes with 4.6% the lowest I could find.

    with shared ownership we were looking at 6% plus so was staggeringly worrying what it could go upto considering the base rate was .5%

    our options now are either to move away from this area which means being away from family when we hope to raise some kids or the other more realistic option of us going back to our parents for 6 months to try and save up as much as possible then hope the % hasn't gone up too much so that we can still afford it!
  • WelshGandalf
    it is kinda nuts that the banks deems FTB are higher risk, so their solution? charge us a good % more on the loan and increase the chance of us defaulting! a bit tongue in cheek as sensible lending is important etc etc
    Originally posted by regbrown
    It's not that FTB's are higher risk, it's the percentage of the property that you are borrowing money from that is the risk. People who bought their house 10-15 years ago will normally have a big deposit thanks to the increase in the value f their home - people who bought last year or FTB's don't have that.

    our options now are either to move away from this area which means being away from family when we hope to raise some kids or the other more realistic option of us going back to our parents for 6 months to try and save up as much as possible then hope the % hasn't gone up too much so that we can still afford it!
    Yup, it sucks. Current bank policy is not the problem though, they are lending sensibly now - if they had been lending sensibly pre-2008 then we wouldn't be in this ridiculous situation! I am in a similar situation. Best of luck in doing what is right for you, just don't over-stretch yourself for a dream as that can turn it into a nightmare further down the line.
    • regbrown
    • By regbrown 25th Mar 11, 1:39 PM
    • 70 Posts
    • 135 Thanks
    regbrown
    cheers, same for you! nope will not over stretch at all as the point is we want to have kids soonish so we would only mortgage based on the one wage to be safe.

    seems that the lack of properties may be an issue as well, none been added to my area for a good few weeks and a couple have either sold or been taken off the market. wouldn't surprise if we get micro climates with waves of pricing dictated on current supply and demand in the set area.

    frustrating that new builds are going up in and around but a 2 bed for £225k, yeah thanks so much....
  • LondonGuy
    FTB Loans.
    I think there might be a mistake somewhere.

    I read on the BBC website that the loan is for up to 80% of the DEPOSIT, NOT 20% of the value of the property as this article says.

    Which article is correct?
  • LondonGuy
    Part own part rent schemes.
    Does anyone know if this loan will apply to the part own part rent scheme?
  • sugababy
    Does anyone know if this loan will apply to the part own part rent scheme?
    Originally posted by LondonGuy
    Does any one knows if this works for people with poor credit ratings, I pay all my bills DD anyway but can't say I have always been a saint at paying by debts in a timely manner. Not a deliberate act but it happens even to the best of us.
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