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Buying a house with the new government scheme

(45 Posts)
Buswanker Mon 05-Aug-13 23:05:15

Does anyone know anything about the scheme?
I know it starts in January and the aim is to help people with a deposit to buy a house but does anyone have further information?
Thank you

Is this the help to buy thing? If it is then its started already.. 30% loan, interest free for 5 years, repayable for the length of the mortgage I believe.

It's what we've just done, it's a pretty good deal. It only applies to new houses though..

Buswanker Mon 05-Aug-13 23:22:14

I think the scheme that starts next year is for all houses.

Buswanker Tue 06-Aug-13 08:24:35

Its good to hear it worked for you, thanks for your reply. I hope it can work for us, other than a bank robbery we would find it difficult to save for a deposit!

dotnet Tue 06-Aug-13 08:30:21

Yes, the scheme starting next year (Jan) isn't for newbuilds only. The deposit approved people will have to raise, is 5% of the purchase price. Buyers need to be a very safe bet, as there's a government guarantee up to a certain level against default.

Buswanker Tue 06-Aug-13 08:38:48

Do you know anything else about the process? We have good credit and we don't have a huge income at all but I am careful with money so dont spend more than we earn.

ihategeorgeosborne Tue 06-Aug-13 09:34:03

You need a 5% deposit and the government will act as guarantors to the bank for 15% of the loan should you default. I don't think they actually give you money for a deposit with this scheme. They will just bail out the bank to the tune of 15% if you get repossessed. You will still need to be able to afford to borrow 95% of the value of the property. Am looking into this scheme myself. The cynic in me thinks that it will just increase asking prices and therefore won't be any help to first time buyers at all hmm

Buswanker Tue 06-Aug-13 10:37:34

I did wonder why this goverment would actually help working families on lower budgets like us, does seem a bit good to be true, I am also suspicious.

specialsubject Tue 06-Aug-13 11:40:22

the government are very keen to help borrowers and those with mortgages. That's fine, but everyone with savings is being screwed and has been for about five years now.

if you are in the favoured group make the most of it!

ihategeorgeosborne Tue 06-Aug-13 11:54:44

I am in the savings group too special. I am trying to save for a deposit to buy a house. I would prefer to get some interest on my savings and buy a house when we have a big enough deposit. This government interference doesn't help anyone, except bankers and builders.

mizu Sat 10-Aug-13 10:27:12

We are looking into it too (the January one) but we don't earn a huge amount and houses in this area are loads cos of the good schools.

We save £500 a month and struggle to do this.

I too agree though that in the end no one will benefit other than building companies and the banks hmm

But I am 41 next year and time is running out........................

Think we will look into the options next year and see what we can afford, if anything.

Talkinpeace Sat 10-Aug-13 17:46:25

It sounds like a disastrous idea to me - bargepole touch not a with

better to let house prices fall back to affordable levels IMHO

Buswanker Sat 10-Aug-13 19:15:25

My concern is it I heard it was available to anyone buying a house, not just people on lower incomes that are unable to save. I also thought the budget for it would soon be used up too if people buy more expensive houses in London etc.

Buswanker Sat 10-Aug-13 19:18:01

I know they say lower incomes but I think it means low in comparison to where you live so you cant afford to save so it might mean anyone can use it?! <so confused>

mizu Sun 11-Aug-13 11:21:44

So basically we will still have to take out a 95% mortgage and will be unable to make the repayments as they will be about £900 a month sad

I thought the government would be stumping up 15% of the deposit that would be repayable after 5 years, looks like that is not the case.

It is all well and good to say let house prices fall but when will that be?

Talkinpeace Sun 11-Aug-13 13:04:52

Well as 20% of mortgages are currently going to buy to let and many other houses being bought cash buy businesses and overseas buyers, sadly normal UK residents are pretty stuffed.

Buswanker Mon 12-Aug-13 09:43:35

I guess I will stop browsing Rightmove for houses we cant afford then. And hope a rich aunty dies peacefully in her sleep after a long, happy life and leaves us 30 thousand pounds.

financialwizard Mon 12-Aug-13 09:49:21

The Help to Buy scheme is currently for brand new houses only. You get a 20% deposit from the government and have to have 5% deposit yourself.

In 5 years you will start to pay interest. For the first year it is 1.75% after that it goes up by the RPI. Or you can buy the government out, if you can afford to do so.

January 1st see's the second hand houses come into it. Will be the same deal for include second hand homes too.

Hope that helps.

Caster8 Mon 12-Aug-13 09:54:03

Talkinpeace. Do you mean that it is a bad idea for society, or that you think it is a bad idea for first time buyers to personally leap in to?

mizu Mon 12-Aug-13 09:58:38

the same deal financialwizard?

I hope by your name that you are indeed a financial wizard and are right and correct and know everything there is to know about all things financial and therefore we may be able to buy next year grin

Will have £10,000 by next April (have £6,000 now) and am now officially sick of renting which I have been doing forever.

Talkinpeace Mon 12-Aug-13 12:42:21

caster8
its just helping to keep the housing bubble inflated without dealing with the real issues.

- developers have 400,000 plots with permission, ready to dig today : but if they did, prices would fall so their profits would drop, so they keep land banking
(cure by abolishing renewal of planning permission for greenfield sites)

- the UK has the most lax laws in the world about overseas buyers so much of London is being bought speculatively by rich people from countries with unstable currencies
AND
because they are not UK resident, they are not taxed on any income they make
(cure : automatically multiply the rates bill on any building above band E without a UK electoral roll person on the deeds)

Caster8 Mon 12-Aug-13 14:18:15

Talkinpeace for primeminister!

Do you think it is or will be a good idea for first time buyers?

Talkinpeace Mon 12-Aug-13 15:03:10

No.
Because unless they know they will be in that house for at least ten years they have a high chance of negative equity.

I bought my first house - 3 bed terrace in Kent for £30,000 in 1987
DH was earning £10,000 in a run of the mill graduate job I was earning £5000 in a dull dull temp job

House is now around £150,000 (x 5)
Dull graduate Jobs are around £25,000 (x 2.5)
Dull temp jobs are around £15,000 (x 3)
therefore property is unaffordable

its the multiples that must be brought back into line.

Caster8 Mon 12-Aug-13 15:10:51

I used to read HousePriceCrash from about 2008 to 2010.
The HousePriceCrash didnt exactly happen, but it has slithered. Is that a fair assessment.
I suppose I am a bit weary of waiting of a crash really, and am aware that house prices are going up in a few areas.

Do you think that the great crash will still come?

And perhaps, do you think that the magic 3.5 average will ever come back. Does it have to?

How far back does the 3.5 go back in history. Was it just say that between 1970 and 2000.

[am really asking on behalf of my next generation. 1 of them may be lining up soon - serious boyfriend and all that]

Talkinpeace Mon 12-Aug-13 15:16:29

HPC have unbanned me so I can read it again!
There will be no crash.
It would be politically disastrous to force negative equity and repossession on millions of "hardworking families"

But net disposable incomes are dropping every year.
Mortgage companies are squeezing the rules.
THe only thing keeping the property market moving is Buy to let and offshore capital.
BUT
HMRC's wheeze for September is going to be to trawl back through the unexpurgated Land Registry data and slap CGT charges onto lots of landlords.
Also, as the benefits cap kicks in, it should start to reduce rental costs in city centres

What should happen is that house prices should stay stable for around 15 years - which with inflation at 3% a year is a 40% drop in real terms
then the multiples will start to go back into line

Caster8 Mon 12-Aug-13 15:29:28

You got banned by HPC. wow! What on earth did you say! [may be wiser for you not to say!]

Thanks for these answers.

HMRC - can they do that? Though I am rapidly seeing that any Government can try most things, especially in a crisis, and all in the name of "for the country's good".

Last paragraph. Interesting. Hadnt thought of that.

Talkinpeace Mon 12-Aug-13 16:19:10

I questioned their maths ....

HMRC have the right to go back 20 years if they have reason to believe that tax is due
so all those people who sold second homes at the peak may have a nasty surprise waiting ...
and its easy pickings because there will be zero sympathy from the lower earners

mizu Mon 12-Aug-13 17:17:23

I know that these schemes are not right for the country as a whole but we plan to buy and never move. And as I said on here before, I am getting old.........

Caster8 Mon 12-Aug-13 20:52:27

"I questioned their maths" grin
Thought the owners would have thicker skins than that.

Have been musing. If house prices stay the same and inflation is 3% for several years, if people cant afford nowand while interest rates are low, they are not going to be able to afford later.

Do you think interest rates will stay much the same?

Talkinpeace Mon 12-Aug-13 21:00:09

I cannot see interest rates rising until there is a change in government as Gideon and Cameroon will do nothing to upset their nice business chums.
Then again Millibrain and Ballsup have no ideas either.

If house prices stay the same, but wages rise by 1% a year, the gap will slowly close
but the big thing will be to start massively taxing the BTL amateurs and clamping down on people buying up houses and leaving them empty

I can see a logic for quadruple rates on all properties without at least one permanent resident
- yes they do not use the bins
- but they mean the council has to pay to rehouse people ....

We have looked into this, our local company who do the scheme, the houses are overpriced and they won't except child tax creds or benefit as income.
So we can afford a similar house (i.e 3 bed, garden etc) without the scheme based on affordability but not on the scheme for one of the new builds.
I am also concerned about being tied to an extra loan for 25yrs that is linked to the base rate, if it all goes up your paying a lot of interest on loan and mortgage, so that might be fine now, but who isn't to say it won't rocket in the 20years your paying the debt?

superduperwuper Fri 16-Aug-13 10:08:46

The interest rate on the mortgage is pretty good - 2.4%

If we took a normal 95% mortgage we are looking at 6%.

We plan to save and pay off half the equity loan before they start charging interest.

It may all go tits up but so could anything : D

I would rather buy an older home but if we did that repayments would be too high to do any repairs that may be needed e.g. to replace boilers or roofs without taking out a massive loan. Never mind ripping up pissy carpets / repairing bodge it DIY etc.

Might as well get something off these clowns in government.

buswanker Sun 29-Sep-13 13:45:34

Its ready next week.
I am VERY suspicious, there was so little information available about it now its ready to go?

buswanker Sun 29-Sep-13 13:46:21

http://m.bbc.co.uk/news

Viviennemary Sun 29-Sep-13 14:55:26

How can house prices rise and rise and wages stay the same. They can't.

CogitoErgoSometimes Sun 29-Sep-13 17:28:17

As long as there are too many buyers and not enough houses for sale, the prices will keep rising in certain areas like parts of the South East. However, there are still regions and areas of towns were prices are static or falling and there are plenty of opportunities to place low offers on property rather than the full asking price.

NoIHaventHadTheBabyYet Mon 30-Sep-13 18:53:16

They are starting the scheme next week instead of in January, its buggered it up for us as we wont have a big enough deposit by then, if it does inflate house prices we certainly wont be able to afford even a couple thousand more to get what we need.

Annabelle69 Mon 07-Oct-13 20:12:52

The house price crash started in 2008 through to 2009 (even London dropped drastically and is never immune) and then the crash was halted in it's tracks by a government with only one aim, to keep house prices as high as possible to give the illusion this country is in recovery. They've thrown everything but the kitchen sink at keeping prices high to benefit the baby boomers, their main vote force. The previous bubble prices have now been re-inflated by a new one, the last one was never allowed to burst. Key points a buyer now needs to bear in mind is...

London Market - When this goes the rest of the country will follow. Prices are being kept afloat by cash rich foreign buyers (see what happened to Dubai when they all pulled out 10 years ago). They are treating this country like a casino, somewhere to park their money. For now.
Interest Rates are going up, Mark Carney has sent the warning - No brainer. A mortgage is for 25 years. Can you afford your mortgage at 6, 7, 8+%? When interest rates go up house prices go down.
Salary Multiples - I earn just above the average London salary. It's 5.5 times my salary to buy a 2 up 2 down in a Kent. In my part of Outer West London it's 8.5+ times my salary to buy a 2 bed flat. Is that normal or sustainable? No.

This scheme should be called Help to Sell, because it's aimed at helping people who bought at stupid prices sell to people at stupid prices.

mizu Mon 07-Oct-13 20:38:23

Annabelle - what do you suggest? You seem to know what you are talking about. smile

Don't really want to get involved in any of these schemes as it scares me to think about having a mortgage that I may struggle to pay in the future.

It has taken us just less than a year and a half to save up £7000. We would love to buy but live in an expensive part of the UK.

Do we just keep on saving year after year? Trouble is I am 40 (although DH is 36) so surely a mortgage is not something I am going to be able to get for much longer.

Sometimes I just think sod it as it is so hard to save what we do every month (£500) but on the other hand, we have given our landlord £41,000 in rent in the last 6 years. shock

Maybe I have just missed the boat.......................

Annabelle69 Mon 07-Oct-13 21:11:51

Mizu - Thanks for the compliment smile I'm just quoting the facts, and we're in unchartered very dangerous terriotory where house prices are concerned. As to what to suggest, my situ sounds like yours. I'm in a very expensive part of the UK (London) and tied here for work, I can't rellocate or commute in easily. I have the 25% cash deposit in the bank, but that doesn't help me much as the mortgage I'd need to take out just on a studio flat in a decent area would be around £150k which I could barely afford the mortgage on at the emergency rates we have now, let alone when they rise. I'm also in my 40's so there is a sense of panic because I want to have a mortgage paid off so I can retire easily. So the choice is either face certain repossession or stay well out of this and save cash. I'll take the latter! The property market is only held up by government intervention and as soon as those props are removed it will crash. Of course they could keep this going on forever? In which case I'll buy cash when my working days are over in a cheaper part of the UK. What keeps me sane is repeating to myself "Do you honestly think interest rates will be at a 300 year low forever?" No I don't, so prices will drop. Everyone's situation is different though, just my take.

Annabelle69 Mon 07-Oct-13 21:57:52

... meant to add, back on the subject of Help to Buy (Sell), if a lot of people opt for this 20% loan for their deposit, then in theory it would push up prices by 20%. The problem for the next set of First Time Buyers is they then are outpriced by 40%, so the government would need to up to deposit loan to 40%. The next set of buyers need 60% and so on. Help to Buy in theory can never stop, because if it does the people at the bottom rungs of the ponzi pyramid selling scheme are shafted.

CogitoErgoSometimes Mon 07-Oct-13 22:10:41

That's not a logical assumption. The number of people taking advantage of the 20% government-backed loan to boost their deposit will be limited by their ability to repay these loans which will be priced at around 6%. Speculators are unlikely to be interested by the ROI. Those with much more to put down will get a much cheaper deal. Prices won't rise by 20%.

Annabelle69 Mon 07-Oct-13 22:54:00

Of course, the mortgaged price a property will sell for is dictated by one thing only, how much someone is able to borrow. As an example if the average UK salary is £25,000 and a couple both earning that wage could borrow 4 x joint salary = £200,000 max borrowing, plus their 5% deposit = £210,000 max property price. Problem for them is the banks want a 20% desposit so the government step in and lend them another 15%/30k. So now their max property price they can "afford" has jumped from £210,000 to £240,000. My vested interest in this, along with anyone else struggling to afford a basic home, is that prices do not rise, so I agree with your sentiment. The rates will be higher, but if they pass the stress tests and their only issue was saving the deposit, then they can bid up on higher priced properties. This scheme is one of the most moronic in economic history and a short term adrenaline shot in the arm. Someone has to get caught on the bottom rungs when this scheme is withdrawn.

mizu Thu 10-Oct-13 15:52:48

Thanks Annabelle, I think we will continue saving........makes more sense to me to buy when we have enough money.

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