Kyle T
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Registered: 11th Sep 04
Location: Selby, North Yorkshire
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I've seen today that the 2013 Budget announcement has included an extension to the "firstbuy" thing they launched a couple of years ago.
Basically offers up to 20% deposit ontop of at least 5% of your own contribution - so you can get up to a 75% mortgage for 5% up front.
You get the 20% section from the government, interest free for a few years and then they start charging you interest on it.
I did similar with Redrow back in 2008 for my first mortgage. I got an 85% mortgage with only 5% deposit.
I'm now looking to move out into somewhere bigger, and thanks to negative equity - I need to save up about £7k just to clear my "easibuy" contribution, nevermind start working on a deposit for a new place! 
We'd planned to square up here this summer, cut our losses and go rent for a few years whilst saving up for a new deposit - but I may consider applying for this scheme next year when it launches.
It's only relevant for new builds I believe, but worth considering for anybody looking to move sometime soon.
Any thoughts on it?
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Ben G
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Registered: 12th Jan 07
Location: Essex
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missing a trick doing all these things for first time buyers only.
we want to move house and an interest free loan for a few years would help us a huge amount. this would free up our 'first time buyers house' so some newbies could get onto the property market.
tbh though, i wouldn't like to be in any sort of negative equity, and am quite glad we struggled at the start as from valuations and 2 other carbon copy houses just sold in the same street, we have between 30-40k equity, which isn't too bad considering our deposit was £17.5k at the start.
[Edited on 20-03-2013 by Ben G]
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mattk
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Registered: 27th Feb 06
Location: St. Helens
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Is this just for new builds? last thing I want for the next few years is every fucker buying houses and prices going up. I want another 5 before that happens
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John
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Registered: 30th Jun 03
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I don't know why they keep bringing these out. They mostly seem like a good way to get trapped in a house worth less than you paid for it.
If everyone can buy houses the builders build more and prices won't budge.
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Kyle T
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Registered: 11th Sep 04
Location: Selby, North Yorkshire
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quote:
Originally posted by John
a good way to get trapped in a house worth less than you paid for it.
Up to a certain threshold, unfortunately it's just worth the sacrifice.
As I said in the OP, I'm currently stuck with NE but I wouldn't change the way in which I "got onto the ladder" even with hindsight. It literally was the only option at the time in my circumstances.
My Missus n' I are now at the time in our lives where our next move will have to be a long term move, because we've got other stuff going on and we just need to be settled with more space. We can either rent for 5 years while we accumulate ~50k to get a big enough deposit, or we can buy into one of these schemes with the sacrifice of paying over the odds for a property.
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Kyle T
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Registered: 11th Sep 04
Location: Selby, North Yorkshire
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quote:
Originally posted by mattk
Is this just for new builds? last thing I want for the next few years is every fucker buying houses and prices going up. I want another 5 before that happens
Yep new builds, it's intended to help buyers, lenders and the construction industry I guess.
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Kyle T
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Registered: 11th Sep 04
Location: Selby, North Yorkshire
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quote:
Originally posted by Ben G
missing a trick doing all these things for first time buyers only.
Sorry, I missed the important bit about the announcement 
This scheme is for anybody, not just FTB. Only limitation I've seen so far is max 600k property.
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VegasPhil
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Registered: 16th Jan 05
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If you are buying a house I think the new buy schemes are alright. The Flats etc are where the problems lie as they are always worthless after a couple of years. I'd take my chances if I didn't have a deposit on doing a deal on a house. Especially if you are planning on being there for 5-10 years.
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jacko198
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Registered: 1st Mar 07
Location: Buckinghamshire
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Have done a few calculations and it seems pretty good.
Only downside to it though is the fact you are buying an over priced new house.
Especially not knowing where you want to be in say 10 years
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A2H GO
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Registered: 14th Sep 04
Location: Stoke
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quote:
Originally posted by John
I don't know why they keep bringing these out. They mostly seem like a good way to get trapped in a house worth less than you paid for it.
This
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AndyKent
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Registered: 3rd Sep 05
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That.
The market is due a price adjustment and this seems like a great way to buy a house which:
1. You can't afford
2. Is too expensive
3. Will be be almost immediately into negative equity if the market does readjust.
I see no upside. If values go down you owe more than you own, and if they go up you have to make up the shortfall to the Government because you don't own the whole thing.
Mad.
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John
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Registered: 30th Jun 03
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It'll begin to inflate the prices for people who currently have houses, which I suppose is a bonus for them.
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Blade_sri
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Registered: 23rd Apr 03
Location: Pop
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Do you need a 5% despoist on new builds then? I have nothing saved up, sick of renting, so what can I do?
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Kyle T
Premium Member
Registered: 11th Sep 04
Location: Selby, North Yorkshire
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quote:
Originally posted by AndyKent
That.
The market is due a price adjustment and this seems like a great way to buy a house which:
1. You can't afford
2. Is too expensive
3. Will be be almost immediately into negative equity if the market does readjust.
I see no upside. If values go down you owe more than you own, and if they go up you have to make up the shortfall to the Government because you don't own the whole thing.
Mad.
Not sure I agree with all of that...
1) I could afford to lend £250k as far as monthly payments are concerned, and I'd even have it paid off before I'm 60 In order to get a property with that amount of money though, I need about £50k deposit. I can afford to save that, but it will take me several years vs being able to move out in less than a year with this government scheme.
2) True, but you're paying the price for impatience - see point 1)
3) Correcto, and I've learned that with my first property... but it still doesn't remove the fact it was my only way of getting a mortgage at that time, and the negative equity is a price worth paying. My next property will be a 15year+ investment unless I get cancer or win the lottery, so the immediate NE doesn't scare me as much.
I'm not sure I understand this bit either:
quote:
and if they go up you have to make up the shortfall to the Government because you don't own the whole thing.
When I did the FTB equivalent of this scheme 5 years ago, I borrowed £14k from the government. If my house price had miraculously doubled in the time I owned it, I would still owe £14k. It was a static loan, which was interest free for 10 years. The loan was secured against the property, but the amount loaned was in no way influenced by the value of my property.
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Colin
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Registered: 4th Apr 02
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It's a short term solution with no sustainability.
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AndyKent
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Registered: 3rd Sep 05
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Kyle, unless I've made a mistake in reading the detail of the bbcs explanation yesterday, it said the government would own an equity stake.
So if they take 15% of the purchase price and then the house goes up in value, in the future you will need even more money than you would have done to buy out the rest.
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AndyKent
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Registered: 3rd Sep 05
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My issue is that it's a false method of propping up the market. Under normal market conditions if no buyer could afford the prices on offer the prices would have to fall.
Instead, the government pumps money into keeping prices high, meaning more debt for the small people, and more profit for the big people.
Basically.
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AndyKent
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Registered: 3rd Sep 05
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While I'm ranting there's also a massive question about what happens when they stop the scheme after 3 years. Market slump in the making as getting a mortgage suddenly becomes hugely more expensive overnight and prices crash as a result.
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Blade_sri
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Registered: 23rd Apr 03
Location: Pop
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Where's the link to bbc information
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AlunJ
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Registered: 3rd Apr 07
Location: Newport
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It's a strange one, I ended up buying on a similiar kind of scheme, now I want to sell and buy a bigger property I'm stuck with either a.) selling at a loss with negative equity - my neighbours is up for 7k less than we paid and it's not selling b.) remortgaging and letting my property out or c.) going for a part ex (which I am considering)
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John
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Registered: 30th Jun 03
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Part ex doesn't really get you out of it, they'll only at best give you market value. If they see the neighbour not selling it'll probably be less than they have advertised at.
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Russ
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Registered: 14th Mar 04
Location: Armchair
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Scheme is for rich pro Tory types to buy second homes
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Ian
Site Administrator
Registered: 28th Aug 99
Location: Liverpool
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quote:
Originally posted by Kyle T
The loan was secured against the property, but the amount loaned was in no way influenced by the value of my property.
The loan amount isn't but your abilty to pay it off would be.
Or if its an equity stake then it'll adjust based on the value as Andy says.
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Ian
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Registered: 28th Aug 99
Location: Liverpool
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quote:
Originally posted by Kyle T
It literally was the only option at the time in my circumstances.
Aside from renting. I'd be interested to see the maths of it - ie. what you've currently paid out in mortgage repayments plus what you'll need to pay to clear the NE, and all the fees with moving in and out against what it would have cost to rent and walk away tomorrow.
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Kyle T
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Registered: 11th Sep 04
Location: Selby, North Yorkshire
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Nah you're right there, renting would have been cheaper over the 5 years.
It gave me 5 years of moral high ground over my mates and their dead money though, and it made my Grandma feel better with her 1980's opinion of renting
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