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Help to buy London!

(35 Posts)
uokhun25 Tue 13-Aug-19 12:13:10

Hello!

Anyone done the help to buy in London??

Basically we have 30k saved - want to stay in our area - property prices are crazy (London)

we are living in a lovely rented apartment for £1300 a month - saving about £1k a month between us in the Lifetime ISA!

We want to buy fairly soon - like next year as we are keen to start a family asap! Getting kind of stressed looking at what we can afford - with 30k we basically can only get something worth about 300k - not a lot on offer for that price and anything that is available is a tiny 1 bed - not ideal with a baby!!

Shared ownership and help to buy are options that could work for us - am leaning towards the help to buy equity loan from the gov rather than shared ownership (monthly repayments higher on the shared ownership and bugs me that you are still paying a fairly high rent on the percentage you do not own!)

help to buy is a hefty enough loan to be getting off the gov - but it would mean we can get a 2bed in a nice new build -monthly repayments are about 900£ which is £400 less than we pay now - so we could overpay the mortgage / save up towards paying back the equity loan!

London is not forever for us we will likely be moving back to Ireland by the time 1st child starts school -so we could just sell up before the interest starts being charged on the loan - the other option is to re-mortgage at that point and borrow more / release equity to pay back the gov as well!

Buying right out is just not really looking viable for a long time and its holding us back from starting a family!

Anyone any success stories of the help to buy?? it's got a lot of a bad press - but I can see the positives!!

right now we are paying 1300 to someone elses mortgage - thats £15,600 a year - so over 5 years we would have paid in 78k towards owning our own property !!

Would just love some peoples opinions / real life experiences!

THANKS x

Alexalee Tue 13-Aug-19 12:46:59

Look at the price of 2 bed flats on the 2nd hand market as that is what you will be selling it as in 5 years or whatever it is.
If the new 2 beds are 400k then the likely 2nd hand 2 beds are around 300k so really you are overpaying by 100k... and if house prices dont go up at all it would be better to rent

uokhun25 Tue 13-Aug-19 13:40:54

only problem is we are renting a 1 bed - 2 beds are about 1500 a month! it seems crazy to pay that much on rent !! sad

2nd hand apartments that were new build about 5 years ago seem to still be selling for about 450k in our area so seems consistent!! but who knows I guess!!

Yikes just not sure what to do

minipie Tue 13-Aug-19 13:48:33

Can you only get help to buy on new builds? New builds are generally said to be not great investments, you pay a premium for “brand new” which you don’t get back on sale. Also if it’s a brand new development you don’t really know what the true value is as nobody has tried selling there yet.

uokhun25 Tue 13-Aug-19 14:00:49

that is true of course @minipie

It is only on new builds!! Starting to lean towards 2nd hand shared ownership again - we could buy 35% and then staircase to 100% and at least then we don't owe the government anything!

Thing is its not like we need to make loads back on the flat - it would just be fab to have some stability and somewhere to live for 5 years and start our family - if we sell and just get what we put into it back or at least a chunk of it back to have a deposit for our next house when we move back to Ireland we would be fine with that - the gov take their money back upon sale and thats the end of it!

Every year we don't know if we can keep our rental or if the rent will go up - its so stressful!

minipie Tue 13-Aug-19 14:10:27

Ah ok, I’d be nervous about being limited to new builds personally, feels a bit untested re value and resale prospects.

I hear you on the stability, it’s a real shame there aren’t more long term (like 3 or 5 year) leases like in some countries. Some landlords are open to longer leases but only once you’ve been there a while I think.

Do your maths carefully if you are factoring in children soon, childcare in London is eyewatering.

JoJoSM2 Tue 13-Aug-19 14:18:53

Are you dead set on zone 2 or something? You could easily get a decent 2-bed for 300k in zone 5 (somewhere super safe and very family friendly with very good commuter links). It seems like a more straightforward option and you can afford it. Help to Buy has that depreciation risk. Shared ownership means having to pay rent + having higher interest on your mortgage so not great given you can afford a
flat on the open market.

HappyHammy Tue 13-Aug-19 14:22:33

You will find a 2 bed flat for 300k outside London on the open market , where do you want to live? do you need to commute? what are your priorities at the moment, two bed, ground floor, garden, do you need to be near public transport, school, all that sort of thing

uokhun25 Tue 13-Aug-19 14:23:06

I am in a very very lucky position that my job offers a heavily discounted childcare place so got that covered!! So doing the sums we can definitely afford the repayments on both the shared ownership or help to buy - and likely save a little as well!

Saving for a bigger deposit to buy outright could take a good few more years and if we have a baby I doubt we can afford to save anymore if rent is 1500£

We will have a slight drop in income for half of my mat leave - but can cope on just my husbands salary but we would have to have a very strict budget at that time - but we would cope!

if we get either of these options we would hope to get a lodger for maybe 6months - a year in the spare room to also help towards saving up a bit more cash as well - something we can't do in a rented property!

I'm seeing a lot of benefits for us - but am being constantly warned off it by others!!

uokhun25 Tue 13-Aug-19 14:26:27

@JoJoSM2 zone 3 - we both cycle to work in 15mins which means no commute costs - so moving to zone 5 would add a whole lot on to our monthly outgoings would go right up - also by staying put in our area I have an almost free childcare place so moving away even if a cheaper place is available - it won't work for us when childcare and commute costs are a factor

BlueSkiesLies Tue 13-Aug-19 14:31:36

Stay in zone 3 and get a 2nd hand SO flat. You get stability and the ability to staircase.

H2B is basically a con to help prop up the householders and keep house prices high. The equity loan could fall due at a nightmare point in time for you if you’re planning a family.

JoJoSM2 Tue 13-Aug-19 14:31:42

I think you could still cycle if you bought on the right side of London for work. It would probably take an extra 15 mins on the bike to go 2 zones out. If you're dead set on staying put, it sounds that it'll need to be one of the schemes for you.

uokhun25 Tue 13-Aug-19 14:39:39

@HappyHammy if we are going to only be here for 5more years we want to stay in our area - no commute costs as we can cycle to work in 15mins or a 20min bus that costs £1.50 each way! Childcare is offered at my current place of work which means a huge saving for us

If we move out to zone 5 or a commuter town it cancels out any savings really - we just want a place to live with a second bedroom and so that we can finally start a family!

uokhun25 Tue 13-Aug-19 14:47:14

I am thinking shared ownership may be the one!! I love my area, we have a lot going on here and are part of the community so why have our last few years in London in a new area we don't really want to live in - am fine with being in one of the schemes and a short commute, free childcare - new builds are great they are warm, low running costs (we live in one now but rent - our current electricity use is so low, they come nice and new and all ready to move into - no work needs to be done - any of the cheaper end available places around need a lot of modernisation and if this is not going to be our forever home it seems like a lot of hassle!

Will happily live in a cheap area when we move home and get a fixer upper and put work into it if its forever!

JoJoSM2 Tue 13-Aug-19 14:51:29

Financially, a second hand SO flat would make more sense. But if you fancy shy brand new, then both HtB and SO could be good options if it's just for 5 years.

uokhun25 Tue 13-Aug-19 14:55:21

@JoJoSM2 totes fine with 2nd hand SO to be honest - some of them are only a few years old anyway so still new enough!

kidsdoingmyheadin Tue 13-Aug-19 15:06:36

HtB can be ok, some friends have done it because it was cheaper than renting & they had good salaries but struggled to save a high deposit & their salaries will likely grow. However they choose an area of London that works for commute & schools & are planning to stay for 5-10 yrs.

BlueSkiesLies Tue 13-Aug-19 15:09:48

I have quite a few friends in SO properties - mid thirties single women, hard to buy outright on one salary. All bought second hand SO not first owner. The SO blocks they bought in seem really well looked after by the occupants as they are invested in their living space and are long term, rather than transient.

uokhun25 Tue 13-Aug-19 15:58:34

Thanks @BlueSkiesLies good to hear some positives - I do have a few friends that think its a great scheme and a few who have actually staircased up to 100%

Any 2nd hand ones we have seen online look nice enough and they do not come with the "brand new" price tag

The 5year plan thing is just an idea - obvs can't say for sure, depends on job prospects as home and various other factors - so it could potentially be for longer!

Thesuzle Tue 13-Aug-19 16:00:39

Help to buy is a con, please don’t do it.
Shared ownership on the other hand is good, you are buying back the remaining portion eventually

uokhun25 Tue 13-Aug-19 16:54:50

@Thesuzle But wouldn't we be buying the full portion of the help to buy as well eventually?? I thought that you take the interest free loan and the idea is you either pay back the loan to the government with savings before 5 years or else you remortgage at the 5year point to borrow more money and therefore paying the gov back what they gave you - failing that you just sell and the gov take their loan back at that point!

Am I missing something else?

uokhun25 Tue 13-Aug-19 17:01:32

my only concern with the shared ownership is that I hear they can be difficult to sell if you only own a percentage - anyone know?

People say they are easier to sell in London as they are more in demand...

kidsdoingmyheadin Tue 13-Aug-19 17:26:01

The concern with both schemes is that the prices are generally inflated & in the current climate you’re unlikely to increase their value.

Yvemen Tue 13-Aug-19 19:18:42

I am buying a new shared ownership property, 3 bedroom flat and less overall monthly cost than our 2 bedroom rental! (Also in zone 3 London, so I too understand your 5 year plan of sticking around as we are doing something similar)

I do however think that getting a 2nd hand SO is a better choice and I would've done this if I could find one we wanted! Much more cost effective wink

I think in certain areas of London you needn't worry about resale opportunities too much because the demand is quite high. Buying on SO right now could be a very good strategic decision, especially since H2B is supposedly ending in 2021 meaning that the first time buyers that would originally consider help to buy as the scheme to help them get on the ladder would instead shift their focus onto shared ownership when the time comes.

Hope this helps and good luck x

TaleOfTheContinents Tue 13-Aug-19 19:54:14

Research what happens after the first 5 interest-free years with Help to Buy. It really put us off Help to Buy.

Essentially, you don't start to pay off the gvt loan. You either need to remortgage so that your mortgage provider takes on the gvt loan, or you start to pay interest on the government loan but these are NOT repayments - just interest that increases year on year.

So, you either need to be in a position where you can afford/qualify for a larger mortgage in 5 years, or you start paying increasingly higher interest fees on your gvt loan without paying it off at all. I guess the last option would be to sell after 5 years (which is what my colleague plans to do), but of course that means paying stamp duty again, moving house, finding a new property, finding a buyer, etc. after a relatively short time in your new flat.

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