so th ill-conceived help to buy scheme will now start this week.(73 Posts)
How come they found money for that then? Surely it's going to cost more than the bedroom tax saves?
I'm upset it's been brought forward.
DH and I both earn slightly above average wage. The cheapest 3 beds in my area go for about £200K. We've given up on the idea of owning because the idea of saving more than my gross annual salary in deposit was so out of reach we felt we would never be able to buy a house. Being able to get a mortgage with 5K of savings is probably achievable at some point. It would mean that we had to cut back a lot and save very hard, but we would do that to get the security of being homeowners.
My worry with the scheme is though that it will push prices up further and so out of reach by the time we had saved. Our local council was running a similar scheme that was limited to first-time buyers and properties below £250K - which seems more sensible.
I wish councils could just be able to build more houses. And that the law on private renting would allow people like me more stability. I would be happier renting if I had more security. Buying houses seems like such a gamble with this scheme as there is uncertainty around interest rates and house prices falling.
It's a ridiculous policy. I've been saving to buy a house for 7 years now. Since this scheme was announced, house prices have risen 10% in my area. They should just leave well alone. Banks aren't lending more than 80% LTV as they think houses are over priced. Also, if this scheme is to help FTBs, why the need to lend up to 600k? Someone's gonna get rich out of this from tax payers money and it aint gonna be FTBs
DO and I were discussing doing this as it's the only way we'll ever be able to afford a house of our own - the only people (of our age) we know who own their own houses have only managed that through inheriting money for a deposit..
To be honest I'm a bit dim in economics and the housing market and don't really understand why it's a bad idea. Not being twee, I genuinely don't understand. Can someone explain?
My take on it Blatant, is that houses are already massively over-priced, due to 300 year low interest rates, quantitative easing, funding for lending and all of these subsequent help to buy schemes. Basically, the government will guarantee the bank 15% of the loan of the property which you buy, so if you default and get re-possessed, they will not be liable for the loss, the tax payer will. Now, the problem is that interest rates will not get any lower. At some point they will have to rise. If you've borrowed the maximum amount you can afford and interest rates rise even 1%, will you still be able to pay your mortgage? If not, then I'd seriously think about embarking into this CON. Dh and I want to buy a house, but I just can't bring myself to risk it with this. Something just doesn't sit right with me. I think the shit will hit the fan in the next couple of years. I think they've kicked the can as far down the road as is possible with house prices.
It's the only way I'm likely to ever own a property, but that doesn't mean I think it's a good thing - it will inevitably lead to a bubble and make it even harder for those a few years younger to buy
We are in the same situation Bears and we are in our 40s with 3 dc, but I'm shit scared of this scheme TBH and the subsequent fall out will be nasty. I just don't know what they're thinking of.
If anybody follows Max Keiser he's been predicting a bubble for ages, going so far as to call it a ponzi scheme. Wages are stagnating (at best), cost of everything else is galloping ahead, although the official inflation rate doesn't reflect that, and when interest rates go up many people are going to go under.
Thanks IHGO, that sounds shit! Won't loads of people buy into this though? If people get the max mortgage they can afford then interest rates go up then the government. Is essentially giving thousands of people home s and then taking them away again, with black marks on those peoples credit records? Am I getting that right?
Will discuss with DP
Sorry about typos - am on the phone!
nicholasteakozy is it the Russia Today Max Keiser? There's a couple of similar people on twitter.
The thing is though Blatant, the banks won't care because they'll have the government guarantee in their pockets and this government won't care either as they'll be long gone. The new government will have to pick up the pieces though and it won't be pretty. They'd have been far better off investing the same amount of money in house building.
That's the fella Meglet. He was on Newsnight a while back saying exactly the same thing. He also says we should be jailing the corrupt bankers, so he's not all bad. I like his show, some of the people he has on explain in simple terms how we're being fucked over for profit in terms even I can understand.
The bottom line is, the government wants to win the next election and the banks will continue to get rich from this scheme on the backs of everyone else as per usual. The only people who will benefit are the already rich as usual. I tell you these people are as corrupt as it gets and I've reached a point where I can't sleep at night for worrying what the hell they're going to do next.
Thanks NT. I've got the right one now.
I'll keep an eye on RT for him. I get odd flashes of understanding this whole financial mess, and then it slips out of my grasp again .
I think compared to the average wage houses are hugely over-priced even in a lot of areas outside London. I think they should have been allowed to fall in a natural way without interest free loans to help people pay a massively huge deposit for a massively overpriced house. Even an interest free loan will still have to be paid back eventually.
Market interference is rarely a good idea including in the setting of interest rates.
I asked a friend who,s buying other day he brought before scheme started but he said that the deposit has to be paid back within 5 years or it will start accruing interest he did not say how much?
But 5 years not a lot of time really.
I think its nuts up to 600k and include,s 2nd home owners.
600k buy a mansion outside of London.
We private rent hate it would love to see more social housing and better rights for tennants like in Europe.
Cant see us ever buying as im 30s husbands early 40,s
maybe if mil dies but then guess we be too old and house prices still be sky high.
Another one here who is renting but would love to own.
I am 40 and DH 36.
We have saved £7000 in just over a year.
We both earn a fair bit less than national average.
The scheme sounds like a chance for us to get a house - but I am really wary of it. Especially the paying back the loan bit - how are people going to be able to do that within 5 years AND perhaps pay higher interest rates as well as the mortgage?!
(It does not apply for buy to lets or second homes by the way)
Useful Q&A on here www.ft.com/cms/s/0/5d17b534-29bb-11e3-9bc6-00144feab7de.html#axzz2gOxgFON0
See also https://www.gov.uk/affordable-home-ownership-schemes/help-to-buy-mortgage-guarantees. The 95% ( help to buy) which is not yet available does not have to be a new build.
The already in place Help to Buy is only for new builds (20% from the state) No fees in years 1 - 5 and 1.75% of the 20% after that https://www.gov.uk/affordable-home-ownership-schemes/help-to-buy-mortgage-guarantees
Once interest rates rise (which they will) and you have to pay back the loan it will all seem like a very bad idea.
Can I clarify - there is no loan from the govt available or offered for those using the new Help To Buy Mortgage Guarantee scheme to buy a non new-build. For those wanting to use the new scheme to buy a non- new-build, they will need to apply for - and have earnings high enough to get - a 95% mortgage, same as now. There seems to be some confusion on this thread with the earlier Help to Buy Equity Loan scheme (for those buying new builds ONLY) which offered a 20% equity loan from the govt, which started costing lots of interest on top of the mortgage, if not paid back within 5 years - clearly a bad idea.
The mortgage guarantee scheme is not really as revolutionary as it is being made out to be - the only difference to now is that the govt will guarantee the lender that if prices fall and your property is repossessed, they ie the taxpayer will pay the lender the next 15% of the value of the property - on top of your 5% that the lender has taken too. So the govt guarantee is not to protect the buyer, it is to protect the lender.
The only supposed benefit for would-be buyers as a result of this guarantee, is that banks are supposedly going to offer 95% mortgages at better rates than they do now, when all the good rates go to buyers with large deposits of their own. But 95% mortgages are already available and the rates on the open market don't sound very different from those mooted as likely under the new scheme eg the Telegraph suggests rates of 4.5-5% for a 2 year fix, which is worse than you can get currently anyway.
So suspect the scheme will actually make very little difference to first time buyers, whose problem is that house prices are just FAR TOO HIGH. They would be foolish to take out a 95% mortgage on a 2 year fix when rates are at historic lows and about to rise, unless they are sure their earnings are likely to rise soon too considerably to keep up with the costs once interest rates shoot up.
The govt has introduced this prior to the election to try to ramp up prices and bring on a housing inspired boom to present the image of a growing economy - just in time for it all to crash the second the election is out the way.
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