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  • FIRST POST
    • Bigrachel
    • By Bigrachel 14th Mar 17, 2:05 PM
    • 36Posts
    • 13Thanks
    Bigrachel
    Is help to buy actually worth it?
    • #1
    • 14th Mar 17, 2:05 PM
    Is help to buy actually worth it? 14th Mar 17 at 2:05 PM
    I was looking at a help to buy mortgage and after consulting with a mortgage adviser I have realised it's actually going to cost me more than it would without the help to buy.

    Does anyone have any experience of help to buy scheme actually working?
Page 2
    • WEASELL
    • By WEASELL 27th Sep 17, 11:06 PM
    • 7 Posts
    • 4 Thanks
    WEASELL
    A warning about help to buy
    Here is a big problem with help to buy. This was the 2013 help to buy.
    Buy a property and take the 40,000. It claims you can pay back the money without penalty.
    When you try and pay back the money in under five years, you need to pay for a house
    valuation, get a solicitor to deal with it and pay for their work. If your 210,00 house has risen to 310,000 they want 20 per cent of the profit. You end up paying them 60 thousand pounds just to escape from the deal.
    My advice avoid this deal at all costs. If you want to move upmarket in the future it makes it so difficult.
    Can anyone tell me where in all the leaflets/information this was made clear, because we believed the money could be payed back in under five years with no penalties?
    • brit1234
    • By brit1234 27th Sep 17, 11:49 PM
    • 5,191 Posts
    • 11,968 Thanks
    brit1234
    Here is the respected housing expert Henry Prior on Help to Buy from April. Its a BBC interview video, pretty balanced about why it was brought in intially and the problems in latter years.



    https://henrypryor.com/2017/04/help-to-buy/
    Scams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.

    Save our Savers
    • dhokes
    • By dhokes 28th Sep 17, 6:59 AM
    • 186 Posts
    • 18 Thanks
    dhokes
    If you choose a solicitor who charges a percentage of a sale then yes. You could pick a solicitor who charges a fixed amount and shop around.

    Here is a big problem with help to buy. This was the 2013 help to buy.
    Buy a property and take the 40,000. It claims you can pay back the money without penalty.
    When you try and pay back the money in under five years, you need to pay for a house
    valuation, get a solicitor to deal with it and pay for their work. If your 210,00 house has risen to 310,000 they want 20 per cent of the profit. You end up paying them 60 thousand pounds just to escape from the deal.
    My advice avoid this deal at all costs. If you want to move upmarket in the future it makes it so difficult.
    Can anyone tell me where in all the leaflets/information this was made clear, because we believed the money could be payed back in under five years with no penalties?
    Originally posted by WEASELL
    • paddycharlie
    • By paddycharlie 28th Sep 17, 10:45 AM
    • 76 Posts
    • 97 Thanks
    paddycharlie
    I have made use of the HTB in Scotland which is a lot better as there is no interest added to the HTB figure.


    It worked out well for us as when we went to purchase our home the only available house on the estate suitable was a large 4 bed detached so we have a larger house for the money we would have paid for a 3 bed.


    As we are treating this house as possibly a home for life we don't plan on paying off the HTB anytime soon or ever.


    Had we have purchased a 3 bed outright we may have needed to upsize in the future but it has taken away that issue.


    Also if house prices were to fall you are insulated from making a greater loss.


    HTB won't work for everybody so it will depend on personal circumstances so you need to work out the pros and cons for yourself. If interest was added after 5 years in Scotland I think I would have still used it.
    • MobileSaver
    • By MobileSaver 28th Sep 17, 10:48 AM
    • 2,023 Posts
    • 3,110 Thanks
    MobileSaver
    The real question should be how did a situation ever arise where the average joe spends the majority of their working life to pay for a place to live in!!!!
    Originally posted by dannyjebb
    Hasn't that always been the case?!?! All the grandparents I've ever known only cleared their mortgages at the end of their working lives.
    Respect to 3 of the greatest actors of all time; amazing people who are totally believable as the characters they play & almost single-handedly make the shows they starred in:

    Peter Dinklage as Tyrion Lannister in Game of Thrones
    Daniel J. Travanti as Frank Furillo in Hill Street Blues
    Claire Danes as Carrie Mathison in Homeland
    • kingstreet
    • By kingstreet 28th Sep 17, 11:04 AM
    • 35,766 Posts
    • 19,577 Thanks
    kingstreet
    Here is a big problem with help to buy. This was the 2013 help to buy.
    Buy a property and take the 40,000. It claims you can pay back the money without penalty.
    When you try and pay back the money in under five years, you need to pay for a house
    valuation, get a solicitor to deal with it and pay for their work. If your 210,00 house has risen to 310,000 they want 20 per cent of the profit. You end up paying them 60 thousand pounds just to escape from the deal.
    My advice avoid this deal at all costs. If you want to move upmarket in the future it makes it so difficult.
    Can anyone tell me where in all the leaflets/information this was made clear, because we believed the money could be payed back in under five years with no penalties?
    Originally posted by WEASELL
    Here's a copy of the HTB Buyer's Guide which has been available since April 2013, so don't let the date put you off.

    https://www.helptobuy.gov.uk/wp-content/uploads/Help-to-Buy-Buyers-Guide-oct-16-V1016.pdf

    When you submit a PIF & Reservation to a HTB Agent, in return you get your Authority To Proceed, a copy of the above and a Personal Worked Example of how the scheme will work for you.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • SuboJvR
    • By SuboJvR 28th Sep 17, 11:29 AM
    • 455 Posts
    • 339 Thanks
    SuboJvR
    I think whether HTB is good or not depends entirely on the area and individual factors involved, there's no rule about it suiting everyone across the country at all times.

    For us, it's incredibly helpful.

    We live in the south east. Houses here are expensive here, as everyone knows. Renting here is expensive; but still the prospective mortgage cost is less than renting. This makes it very difficult to save for a 10% deposit (say, 30-35k). Not impossible, but difficult. In another few years we would've saved the extra for higher deposit + moving costs + other costs associated with buying a non-new build (e.g. unexpected repairs)... but we'd also be getting nearer 40. Not the end of the world, granted...

    It's not essential to get on the ladder ASAP. And others make compromises e.g. moving to different areas. But we moved down south to be nearer my family who do need some support from time to time, so to be able to buy in the region is really valuable to us.

    We also have visa complications to throw into the mix that make 95% mortgages, even 90% mortgages very unlikely. Some lenders only consider 75%+ hence HTB steps in to bridge that gap!

    The way I see it, we are deferring some of the costs we would otherwise have had with buying a home whilst avoiding some others (unforseen repairs and such).

    Are we worried about house prices changing? Possibly, but up or down the HTB moves with it. But is this going to be our forever home? Possibly? Not sure. If it is, after 7-8 years we will remortgage to buy out the HTB loan as equity will allow it. We will be saving, or overpaying the mortgage, to make that happen.

    What I do know is that non-new houses are selling (and yes, actually selling) in this area for the price we agreed on our new build four months ago. And similar new builds are now on the market for 30k+ more. Yes this bubble will maybe burst but I'm not convinced, especially with new rail links (will be 5-6 trains an hour to a variety of stations) coming here for London making it all the more attractive.

    So it is a bit of a risk, but I don't feel we are rushing into anything as we have been researching this area for several years now and it's only becoming more attractive to buyers.

    Edited to add: If something crazy does happen and our house value goes up by 100k after 5,6,7 years, we would then have enough equity to move again to a similar house and just buy out the HTB that way.
    Last edited by SuboJvR; 28-09-2017 at 11:34 AM.
    • gycraig
    • By gycraig 28th Sep 17, 12:47 PM
    • 519 Posts
    • 446 Thanks
    gycraig
    Personally looked at it and chose to save for a 10 percent deposit. Interest rates may rise and fall but to an extent I'm gonna pay what I'm gonna pay.

    Last thing I want is to be petrified of house prices in my area shooting up.

    Problem is you don't gain anything if your house shoots up in value as so do the houses you are looking at.

    Doesn't make sense if house is under 150k ish as it's not gonna take years to save the deposit anyway
    • Southerner3000
    • By Southerner3000 28th Sep 17, 1:14 PM
    • 37 Posts
    • 13 Thanks
    Southerner3000
    Personally looked at it and chose to save for a 10 percent deposit. Interest rates may rise and fall but to an extent I'm gonna pay what I'm gonna pay.

    Last thing I want is to be petrified of house prices in my area shooting up.

    Problem is you don't gain anything if your house shoots up in value as so do the houses you are looking at.

    Doesn't make sense if house is under 150k ish as it's not gonna take years to save the deposit anyway
    Originally posted by gycraig
    That can be applied to every aspect of HPI, regardless of whether HTB is used or not.

    The simple fact is that to anyone looking at upsizing in the future, the huge amounts of HPI we have seen will be a bad thing.

    I can never understand why people feel so happy that their 2 bed flat has gone up by £50k as the house down the road that they may want when kids arrive has gone up by £100k!
    • cloo
    • By cloo 28th Sep 17, 2:14 PM
    • 1,229 Posts
    • 1,330 Thanks
    cloo
    I've worked with senior people in the real estate business who think there are commercial mortgages that are much better value than help to buy.
    • Time2go
    • By Time2go 28th Sep 17, 4:24 PM
    • 198 Posts
    • 44 Thanks
    Time2go
    For us godsend. Less than perfect credit history couple with buying at peak in 2007 and a market that still hasn't recovered (in fact making 15k loss on purchase cost)

    Therefore only need 5% deposit builders have paid half legal fees, estate agents fees and stamp duty. New mortgage for next 5 years £100 per month more than current. Getting large 4 bed house compared to current 1 bed flat.

    In five years time childcare fees won't be an issue so will remortgage to pay off equity loan. Unlikely but if prices shoot up we will have loads of equity to be able to buy new property:

    Without htb we would have had to go into rented as wouldn't have had enough deposit to buy.
    • Crashy Time
    • By Crashy Time 28th Sep 17, 8:02 PM
    • 8,790 Posts
    • 3,073 Thanks
    Crashy Time
    The way I see it, you get 20% of your mortgage interest free for 5 years, after that you pay 1.75% as opposed to 2.35% which is the best rate we can get on a mortgage, in the area we are in house prices haven't rose much for the past 6 years or so, when you come to repay you pay 20% of the current value which is fair enough as technicially the govt owns 20% of the house. The real question should be how did a situation ever arise where the average joe spends the majority of their working life to pay for a place to live in!!!!
    Originally posted by dannyjebb

    Well we kind of know how it arose, but it is the unwinding part many people will need to get their head round. I think Corbyn is just the man for the job actually
    • hammy1988
    • By hammy1988 29th Sep 17, 10:49 PM
    • 143 Posts
    • 96 Thanks
    hammy1988
    It works for us.

    Bought a nice new shiny New Build (nothing like the horror stories we have heard so far).

    We put in £35k Equity from our first house sale. £47k HTB

    We plan to remortgage within two years when our fixed rate ends and see if we can lend more to pay half of it off (Husband is Royal Navy and is borderline being promoted and moving up another rank).

    If that fails e.g no promotion... we plan to remortgage at the five year mark and pay half again if we can.

    The last backup plan... when hubby signs off on his 22 years in 8 years time, he gets a large lump sum and we are going to pay it off then.

    On top of all that we are trying (I emphasise trying) to save money alongside as well to help towards it.

    I DO believe you should really look into it and plan ahead, do not go into it on a whim and hope for the best in future financially. You always need to plan what to do for every monetary scenario.

    Personally, I think it works best for those who know they will be receiving lump sums in the future as you are able to pay it off in staircase at 50%. We wouldn't have gone for it without knowing hubby would receive a lump sum after finishing in the RN...this is probably why 6 out of our 15 neighbours (We 15 are the first wave to move onsite) are all military families!

    EDIT: We are North Devon...expensive housing here!
    • Spiker
    • By Spiker 7th Apr 19, 8:42 AM
    • 1 Posts
    • 0 Thanks
    Spiker
    Hi folks,
    I am really against paying interest to the banks.

    I believe with Help to buy it is mandatory to take a mortgage. If i had 200k in lifetime savings could i take a short term mortgage to make me eligible for the help to buy loan and then after the mortgage term pay the mortgagr off in full and be left with only the HTB loan interest free for 5 years?

    Gaming the system a bit, but is it legally possible?
    • letitbe90
    • By letitbe90 7th Apr 19, 9:16 AM
    • 337 Posts
    • 385 Thanks
    letitbe90
    I thought about it once but came to conclusion that it isnít worth it unless you really love the house and can pay the government loan very quickly.

    I find the fact that the governmentís loan is based on the % value of your house as well as increasing by RPI+1%, makes it daylight robbery. Itís a scheme that benefits developers and government, not homebuyers.
    • Instability
    • By Instability 7th Apr 19, 11:44 AM
    • 14 Posts
    • 4 Thanks
    Instability
    My main issue when looking at it was the fact that it had to be new build houses.

    I would have been able to repay the 20% loan after 5 years therefore I'd have had an interest free 20% of the mortgage for 5 years which financially was great. But being forced to buy a new build with all the potential problems associated with that put me off.

    If you can pay it back before the interest gets silly and you're happy with a new build then it'll be the best way to go about getting a new build with a loan.
    • dafa93
    • By dafa93 7th Apr 19, 11:49 AM
    • 7 Posts
    • 3 Thanks
    dafa93
    I think, despite some of the comments in this thread, you should do what works for you.

    We have just bought our 2nd house using help to buy. We were able to buy a 3 bed detached, almost double the size of our current 2 bed terrace.

    It is true that there is a premium with new builds. But at the same time, we have had our stamp duty paid and have upgraded kitchen with integrated appliances free of charge. Already huge costs gone so we are saving having to worry about affording new appliances. They gave us 'free' turf and are building a patio for free because the built our front footpath in the wrong place.

    Just be sensible about what you can afford. We definitely wouldn't have done the full 20% loan, but have done what we can realistically pay back in 5 years. So remember you dont HAVE to borrow 20%, despite what your mortgage broker may tell you!

    We are also lucky that we have paid off credit cards so will be in a position to overpay the mortgage every month.

    At the end of the day, we have a house which we could stay in forever if we chose to, so dont have the pressure of needing to upsize again.
    • kingstreet
    • By kingstreet 7th Apr 19, 5:31 PM
    • 35,766 Posts
    • 19,577 Thanks
    kingstreet
    Hi folks,
    I am really against paying interest to the banks.

    I believe with Help to buy it is mandatory to take a mortgage. If i had 200k in lifetime savings could i take a short term mortgage to make me eligible for the help to buy loan and then after the mortgage term pay the mortgagr off in full and be left with only the HTB loan interest free for 5 years?

    Gaming the system a bit, but is it legally possible?
    Originally posted by Spiker
    No.

    Minimum loan is 25% of the property purchase price and you can't repay the mortgage before you repay the loan.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • buel
    • By buel 15th Jan 20, 9:21 PM
    • 666 Posts
    • 73 Thanks
    buel
    Hello.
    My wife and I are thinking of using a H2B but are unsure about one aspect;
    - If we were to choose a 5 year fix, would we be relying purely on an increase in house value, and so subsequent remortgage, in order to repay the Government loan? (Or would some of the capital have been paid off in that five years?)
    Not yet a total moneysaving expert...but im trying!!
    • DCFC79
    • By DCFC79 15th Jan 20, 9:42 PM
    • 35,622 Posts
    • 22,488 Thanks
    DCFC79
    Hello.
    My wife and I are thinking of using a H2B but are unsure about one aspect;
    - If we were to choose a 5 year fix, would we be relying purely on an increase in house value, and so subsequent remortgage, in order to repay the Government loan? (Or would some of the capital have been paid off in that five years?)
    Originally posted by buel

    A question for a mortgage broker/advisor.
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