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Help to buy pros and cons

(8 Posts)
TheRealKimmySchmidt63 Tue 04-Apr-17 21:51:59

Hi all I'm a first time buyer - considering the help to buy scheme, but am fearful of not ever owning the home using this scheme or being in a position where I might be paying back more than I borrowed, wondering whether it's worth continuing looking on the open market at 2 bed flats for me and my son or getting a nicer place with the help to buy with the hope it will gain more equity quicker - anyone have any experience of using the scheme in London?

MongerTruffle Tue 04-Apr-17 21:54:00

To clarify - are you considering the Equity Loan?

PoochiePie Tue 04-Apr-17 21:57:10

We bought using the HtB equity scheme. It was great because we got a very good mortgage rate, and technically have mortgaged a smaller amount.

Only downside is we now need to unexpectedly move, and physically can't rent our house out, so we now have to sell it. Which is fine, I would never expect to use it to finance a buy to let lol, it's more that it's taking a while to sell, and we can't afford to drop the price by much, but can't temporarily rent either so feel a bit trapped...

TheRealKimmySchmidt63 Tue 04-Apr-17 22:58:26

Hi yes the equity loan - sorry to hear what has happened Poochie Pie- I like the idea of the equity loan but just feel like I'd never own the home I'm 39 so the chances of me paying the mortgage and then paying the loan would be quite slim and then not being able to leave a property for my son I think at least buying something on the open market means hopefully paying it off and leaving it for him as we live in London but have no family here and I just worry about his future as a Londoner without me investing in a home for him - fine if he wants to live elsewhere but I'd like him to have the choice of living in his hometown not having to live elsewhere because he can't afford to live here.

cestlavielife Wed 05-Apr-17 17:30:38

you will have to start paying 1.75% interest on the loan after five years. that could be a lot.

TheJiminyConjecture Wed 05-Apr-17 17:36:15

The interest increases year on year after the 5 year interest free period. And you can only buy the equity share back in 10% chunks.

Those were the main cons for us. Plus we saw 5 year old 'new builds' sitting stagnant for months on rightmove where they clearly couldn't afford to drop the price.

TheJiminyConjecture Wed 05-Apr-17 17:37:53

Oh and you also need to get permission for any work on the house. The example we were given was adding a conservatory, the logic being if you can afford that then you should be repaying your equity loan.

TheRealKimmySchmidt63 Wed 05-Apr-17 17:42:56

Thankyou for your comments think I'll stick to the open market and look for a fixer upper!

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