deano87
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Registered: 21st Oct 06
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So the Government has brought forward the release date by 3 months to next week. Although mortgages won't be finalised until the new year which is a ball ache, meaning earliest completion is 2nd January 2014.
I've looked into this and it seems "ok", as far as first time buyers go.
The previous Help to Buy was a 20% equity loan. This is a mortgage guarantee. So you essentially still need a 5% deposit but have a 95% LTV rather than 5% deposit, government contributing 20% and so having a 75% LTV.
The mortgage guarantee works by "guaranteeing" in the event of default 15% of the mortgage. The owner owns 100% of the property. The government has no share. And the guarantee is in place for 7-8 years.
What this means is lenders feel you are more affordable and offer better rates. Rates aren't yet released, however they're expecting to be in the region of 90% LTV products. So this makes something like the Save to Buy Nationwide 95% scheme seem expensive, as you'll be on higher rates than with Help to Buy but still on 95% LTV.
This will undoubtedly stimulate the market and push prices up BUT IMHO it is better than phase one of Help to Buy because the government has no say on the value of the house at resale and/or purchase. Actually I think they'd rather you get the best purchase deal thus resulting in higher equity increase over time.
Thoughts? And I mean thoughts of the product and scheme rather than what it will do to the market.
As I was banking on 95% through Nationwide with Save to Buy, I don't see why I shouldn't take advantage of this to get lower rates. Very little info out there with regard to what it means for the buyer in terms of small print.
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AndyKent
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Registered: 3rd Sep 05
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As the saying goes, if you haven't got anything nice to say don't say anything at all.
You don't want to hear it all again, obviously 
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deano87
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Registered: 21st Oct 06
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quote:
Originally posted by AndyKent
As the saying goes, if you haven't got anything nice to say don't say anything at all.
You don't want to hear it all again, obviously
Is that in relation to what it will do to the market, or the product itself?
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Hammer
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Registered: 11th Feb 04
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Scraping away all the facts and figures it's simple, if you're confident that you'll be making more money in the short to mid term then it's a fantastic way to get onto the property ladder. Failing that good luck paying back a loan that will be like a nous round your neck very quickly.
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AndyKent
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Registered: 3rd Sep 05
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Market bro
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deano87
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Registered: 21st Oct 06
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quote:
Originally posted by Hammer
Scraping away all the facts and figures it's simple, if you're confident that you'll be making more money in the short to mid term then it's a fantastic way to get onto the property ladder. Failing that good luck paying back a loan that will be like a nous round your neck very quickly.
Do you mean loan as in mortgage, or loan as in what the government gives? With the new Help to Buy there is no loan.
And the rates/deposit/property value I'd be looking at will be similar to renting. I'll be moving out regardless, so it's either £750pm rent or £750pm mortgage.
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Hammer
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Registered: 11th Feb 04
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quote:
Originally posted by deano87
quote:
Originally posted by Hammer
Scraping away all the facts and figures it's simple, if you're confident that you'll be making more money in the short to mid term then it's a fantastic way to get onto the property ladder. Failing that good luck paying back a loan that will be like a nous round your neck very quickly.
Do you mean loan as in mortgage, or loan as in what the government gives? With the new Help to Buy there is no loan.
And the rates/deposit/property value I'd be looking at will be similar to renting. I'll be moving out regardless, so it's either £750pm rent or £750pm mortgage.
Loan as in mortgage although the same thing applies to the first phase of the same scheme.
If you are struggling to get 10% together and require this new guarantee it doesn't bode well for your ability to afford a mortgage on a property, unless you are projecting yourself to earn more short to mid-term and therefore can safely take the plunge with the lower deposit knowing you are going to be earning more in the long run.
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Ben G
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Registered: 12th Jan 07
Location: Essex
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Instead of faffing around trying to find a shortcut to get onto the property ladder, why not wait a bit and save up a healthy deposit?
Nothings free in life. Unless you're the type who.goes through rubbish bins.
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AndyKent
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Registered: 3rd Sep 05
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Just reviewed the previous help to buy thread, i think you should re-read some of the comments from that one if you haven't already.
Before you jump on board with this one consider how long it would take you to save up a proper deposit and look at the cost of "second hand" homes which will be better value (lower priced!) than new build. You mentioned your take home in the other thread which isn't bad, between two if you saving it should take that long, surely.
I mean, you must have a decent wedge already, you've been saving what, 2 years?
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deano87
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Registered: 21st Oct 06
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quote:
Originally posted by AndyKent
Just reviewed the previous help to buy thread, i think you should re-read some of the comments from that one if you haven't already.
Before you jump on board with this one consider how long it would take you to save up a proper deposit and look at the cost of "second hand" homes which will be better value (lower priced!) than new build. You mentioned your take home in the other thread which isn't bad, between two if you saving it should take that long, surely.
I mean, you must have a decent wedge already, you've been saving what, 2 years?
I kind of started this thread as a general discussion on the new scheme but alas, it is focused on me.
By December/Christmas pay packet we will have £10k saved up. Sounds a lot, but the price of property we're looking at is circa £125k to £140k, meaning moving out is achieveable next year with 95% LTV, plus we could afford repayments within the specturm.
The new Mortgage Guarantee is on new or used, hence why I didn't go with the previous 20% Equity Loan which was on new homes only. Also, I didn't agree with the cost of a new build 2 bedroom home with little space of £175k, when they can be had with the above price brackets.
Unfortunately we cannot save as much as a couple should be able to living at home. The girlfriends parents have struggled during the economic downturn and as a result her outgoings are that what she'd be paying whilst living on our own. I could probably save more agreed, but not as much to make a significant difference to the saving period.
I can see why people say "save up longer for the 10% deposit" and you will struggle on 95% with it being restrictive.
I disagree to a certain extent. Mortgage repayments on a 95% deposit on a £135k property is equivalent to what we'd be paying in rent. So if we were already renting then going into owned, our lifestyle would be no different other than actually buying every month!
The latest Mortgage Guarantee is good because it gives you the lower rates of 90% LTV but with 5% deposit, meaning it is more affordable.
I guess everyone is in a different situation with what they can afford to save, what their lifestyle/circumstances are, area they live in etc. What works for some won't necessarily work for others.
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AndyKent
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Registered: 3rd Sep 05
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quote:
Originally posted by deano87
I kind of started this thread as a general discussion on the new scheme but alas, it is focused on me.
Only because its you that brings it up and wants to use it!
quote:
I can see why people say "save up longer for the 10% deposit" and you will struggle on 95% with it being restrictive.
Its not the payments I would be concerned about though. Its the fact you'll own so little of the property to start with that you would be stuck with it. A minor shift in the market will leave you with next to no ownership. You might have access to slightly lower rates in the meantime, but your security is next to nothing.
quote:
I disagree to a certain extent. Mortgage repayments on a 95% deposit on a £135k property is equivalent to what we'd be paying in rent. So if we were already renting then going into owned, our lifestyle would be no different other than actually buying every month!
Not really a fair comparison. It doesn't look like you want to rent, so using that as a comparison isn't particularly helpful. You are in the decent position of having, relatively, few outgoings so using that to your advantage by saving as much as possible at getting at least 10% gives you a huge amount of security in the future.
quote:
The latest Mortgage Guarantee is good because it gives you the lower rates of 90% LTV but with 5% deposit, meaning it is more affordable.
In the short term, yes. In the event of a market crash, you're immediately shafted.
I must admit, I haven't looked at the difference in rates for the new scheme and conventional products, but I suspect its something like £25-50 a month which, imo, isn't worth it for the lack of security you have.
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Rob_Quads
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Registered: 29th Mar 01
Location: southampton
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quote:
Originally posted by deano87
I'll be moving out regardless, so it's either £750pm rent or £750pm mortgage.
With a mortgage comes a lot more responsibility as well.
When your roof leaks and you need to replace it and then your boiler blows up and you need to find 3-4K very quickly suddenly its not the same as renting where you pick up the phone to the owner and say "Fix it"
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Hammer
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Registered: 11th Feb 04
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That's one of the major problems with this scheme, it's doing nothing to remove the stigma that renting has built up in this country. It remains, illogically, not an option because it's 'dead money' when in fact it can be the better option in many cases.
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Marc
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Registered: 11th Aug 02
Location: York
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My mortgage covers approx 82% of the value and the rest is my deposit.
If there are two of you I say continue to save and don't bother with the Help to Buy scheme.
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Ben G
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Registered: 12th Jan 07
Location: Essex
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Can't your other half move into your parents' house? Mine did, albeit different circumstances.
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deano87
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Registered: 21st Oct 06
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quote:
Originally posted by Ben G
Can't your other half move into your parents' house? Mine did, albeit different circumstances.
Unfortunately won't work because the house is too small.
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deano87
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Registered: 21st Oct 06
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The average property price we're looking at is £140k. Providing we get it for that and have £10k deposit, that's 92% LTV, which of course is better...however still on the Nationwide Save to Buy product. 5.89% interest rate.
Will naturally strive for a greater LTV.
My mate who is in the process of buying says that taking into account it taking a while for the mortgage etc to go through, you can then start saving for fees etc, as these don't happen till completion. A wise move?
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Marc
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Registered: 11th Aug 02
Location: York
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There are a few fews before completion too.
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John
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Registered: 30th Jun 03
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It doesn't stop at fees, I'm still buying something house related just about every month over 2 years later.
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deano87
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Registered: 21st Oct 06
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I must admit one thing I've overlooked is money for furnishings. We have most stuff, including sofa, because we have got a living room at her parents place. But won't have any white goods. Fingers crossed fort integrated!
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John
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Registered: 30th Jun 03
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Curtains and blinds are expensive. Even moreso if you can't do DIY stuff/don't know someone who can. If it's a new build carpet is expensive, turf is expensive if you don't get it thrown in. There are about a million things you won't have thought of. Council tax is expensive. It's all perfectly doable of course, just constant outgoings.
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Ben G
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Registered: 12th Jan 07
Location: Essex
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quote:
Originally posted by John
It doesn't stop at fees, I'm still buying something house related just about every month over 2 years later.
Glad it's not just me! Nearly 3 and a half years now and we always seem to be buying crap.
Shower pump went wrong, ceramic hob cracked, exterior doors between lounge and conservatory... It all adds up. my dads fixed a lot.of things for free also, so you'd have to factor in the cost of calling out a plumber/electrician.
Then you have the basics when moving into an older home, such as flooring, paint and so on. It's expensive stuff.
Also remember women love to buy tat for their homes and it becomes a ballache.
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deano87
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Registered: 21st Oct 06
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I am officially horrendous at DIY but my dad is a builder and doesn't want me to move out cause he'll be left with mum so he'll always be found. Just need to make sure he comes round in the van with tools then ply him with bacon and coffee.
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deano87
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Registered: 21st Oct 06
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So watched BBC Breakfast this morning and a guy on their said about affordability at 95% with interest rates. And how interest rates are at their lowest (although high on a 95% mortgage).
And basically at the end of the fixed if interest rates go up you're screwed, if you bass current outgoings on the maximum i.e. no room for maneuver.
Going to strive for 10% deposit but still see what Nationwide say when I have a week off in November.
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Daniel_Corsa
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Registered: 21st Apr 04
Location: Wigton, Cumbria
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Save as much as possible. We saved like mad I downgraded cars and got £21k deposit between us.
So glad we did now, lower monthly payments, time to buy furnishings, money to live and enjoy life still.
Also 3 years since moving in still things to do, never ending money pit.
April '06' Corsasport Feature Car  | Aug '08' Total Vauxhall Feature Car | Spring '09' Fast Car Feature Car
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