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  • FIRST POST
    • shopaholicno1
    • By shopaholicno1 12th Mar 18, 2:41 PM
    • 129Posts
    • 474Thanks
    shopaholicno1
    What are people's thoughts on the Help to Buy?
    • #1
    • 12th Mar 18, 2:41 PM
    What are people's thoughts on the Help to Buy? 12th Mar 18 at 2:41 PM
    We have our mortgage offer of £210k via a broker(total includes our 10% deposit), but I'm struggling to find something that suits our needs in our range, location etc.

    There are some new builds that would be perfect, but they are £230k. These properties have Help to Buy available.

    Can anyone tell me the pros and cons of the Help to Buy scheme? Also, would our current standard mortgage offer work on one or would we need to find another mortgage offer designed for the scheme?
Page 1
    • cjdavies
    • By cjdavies 12th Mar 18, 2:43 PM
    • 3,306 Posts
    • 3,543 Thanks
    cjdavies
    • #2
    • 12th Mar 18, 2:43 PM
    • #2
    • 12th Mar 18, 2:43 PM
    https://www.money.co.uk/guides/what-are-the-pros-and-cons-of-the-help-to-buy-scheme.htm
    • Amanda_Cm
    • By Amanda_Cm 12th Mar 18, 3:23 PM
    • 166 Posts
    • 200 Thanks
    Amanda_Cm
    • #3
    • 12th Mar 18, 3:23 PM
    • #3
    • 12th Mar 18, 3:23 PM
    I was having the same questions few months back. Find the new builds in our price range really small, charmless and depressing.
    Also didn't want to borrow more money that we can afford. In the end of he day you have to return the 20k in 5 years together with your regular mortgage pay. Also thr price of a new build house will decrease soon after you move in. With all the borrowed money you may find yourself in a negative equity for years. The prices may drop further because of Brexit. Noone knows really. They may increase but having all those hings in mind I wouldn't buy new build at the moment. Maybe only if I have huge deposit...
    • Crashy Time
    • By Crashy Time 12th Mar 18, 3:47 PM
    • 6,089 Posts
    • 2,354 Thanks
    Crashy Time
    • #4
    • 12th Mar 18, 3:47 PM
    • #4
    • 12th Mar 18, 3:47 PM
    Massive gamble at the moment, the scheme is only there to help developers shift over-priced houses (if you could even call them that) and not in the slightest to help FTB`ers IMO.


    https://www.bloomberg.com/news/articles/2018-03-09/why-it-matters-that-the-libor-ois-spread-is-widening-quicktake
    • Nicola83
    • By Nicola83 12th Mar 18, 7:21 PM
    • 47 Posts
    • 32 Thanks
    Nicola83
    • #5
    • 12th Mar 18, 7:21 PM
    • #5
    • 12th Mar 18, 7:21 PM
    We've just purchased our first home with help to buy. You don't have to pay it back after 5 years, you start paying interest on it after 5 years, and then pay the 20% equity loan back either at 25 years or when you sell the house, whichever comes first. If the value of the property decreases then you pay 20% of the value, even if that is less than what you originally borrowed. It also works the other way, where if the value of your house goes up, you'll pay more.
    We don't intend on moving anytime soon, we've bought this house as a place to make ours, we'll get married while we live here and build our life together so it was worth it for us. We have already set up a savings account to put any extra cash we have towards paying it off as soon as we can, but obviously we are not naive, we know things will crop up, things will change, but for us it helped us get our dream home a little bit quicker and we got a really good deal on our mortgage, the best around at the current time.
    • Thrugelmir
    • By Thrugelmir 12th Mar 18, 8:59 PM
    • 58,535 Posts
    • 51,896 Thanks
    Thrugelmir
    • #6
    • 12th Mar 18, 8:59 PM
    • #6
    • 12th Mar 18, 8:59 PM
    We have our mortgage offer of £210k via a broker(total includes our 10% deposit), but I'm struggling to find something that suits our needs in our range, location etc.
    Originally posted by shopaholicno1
    Sometimes you just need to be patient. Register with plenty of agents, be ready to view at short notice etc. In the meantime keep saving.

    There'll always be a property which is just out of reach.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • Beardmidget
    • By Beardmidget 12th Mar 18, 10:19 PM
    • 149 Posts
    • 109 Thanks
    Beardmidget
    • #7
    • 12th Mar 18, 10:19 PM
    • #7
    • 12th Mar 18, 10:19 PM
    I would think quite carefully about it- if you can afford traditional lending it is more predictable in the long run.

    My reading of it is that the people who stand to make the best profit out of H2B (aside from the housebuilders for whom it is a massive bung), would be people who don’t really need it and could repay in a fairly short period of time, to take advantage of Newbuild price slip. If the government ‘owns’ 40% of my 600k house, and tomorrow it has a market value of 550k, then i’d be quids in if I repaid them as they’d get 20k less than they put in and i’d have gotten the discount you can’t easily get from the builder.

    One thing which does surprise me is how much higher the H2B interest rates stand- they’re markedly more than in the normal mortgage market, and this again should make you do some hard sums about overall cost.

    Nicola83- wouldn’t it be more cost effective to overpay the mortgage by the amount you’re currently saving, and remortgaging to cover the H2B loan when the time was right? It doesn’t seem that you can pay down H2B incrementally because it depends on current market value, in which case you’ll save way more in interest by overpaying current mortgage than you will by keeping it in a savings account which, at present, pays next to no interest.
    • Tootling
    • By Tootling 12th Mar 18, 10:44 PM
    • 34 Posts
    • 28 Thanks
    Tootling
    • #8
    • 12th Mar 18, 10:44 PM
    • #8
    • 12th Mar 18, 10:44 PM
    H2B very useful for getting a leg a bit higher up the ladder if you want a slightly nicer house than you could otherwise afford. But you should aim to repay the loan by the 5 years are up otherwise you'll be paying every month interest which works be silly.

    Plan to pay it off either through saving or remortgaging. Or selling your house after 5 years... Whatever. Don't just sit there for 20 years paying off interest! Depending on how much you borrowed it could be rather significant.
    • getmore4less
    • By getmore4less 13th Mar 18, 9:22 AM
    • 32,051 Posts
    • 19,226 Thanks
    getmore4less
    • #9
    • 13th Mar 18, 9:22 AM
    • #9
    • 13th Mar 18, 9:22 AM
    higher the H2B interest rates stand[/B]- they’re markedly more than in the normal mortgage market, and this again should make you do some hard sums about overall cost.
    by Beardmidget;74013710
    .....
    One thing which does surprise me is how much [B
    Look again, for those taking a 95% LTV mortgage and those taking a 75% LTV HTB with 5% own money the rates are much better with HTB and the 20% extra is at 0%

    take nationwide 5y no fee fix
    95% 4.75%
    75% 2.19% full deposit
    75% 2.44% HTB

    with that 20% cash(if you have it) earning 1% equivalent is 2.17%
    • hammy1988
    • By hammy1988 13th Mar 18, 9:28 AM
    • 130 Posts
    • 87 Thanks
    hammy1988
    We used HTB. As long as you plan ahead and think carefully it is a good system I think.

    My husband is armed forces so will receive a lump sum in the near future when he leaves, we will be using this to pay off the outstanding amount owed to the HTB.

    We also received a much better mortgage rate using HTB.

    Your house value may decrease, but then it may not. It all depends really on how much housing is due to be built around your area in the future? If the builders only have five year building plans (with the government anything is subject to change) then selling new builds will be fine in later years.

    The key is always having in mind as to repaying the HTB when you can. I'd advise anyone who expects to receive a lump sum in the near future to definitely take out the loan. This is the only reason we did. Those who are not expecting this, think carefully if its the right thing to do.
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