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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

To ask you what you think of the newbuy or firstbuy mortgages for first time house buyers?

21 replies

12345FishAlive · 19/03/2013 13:20

Just would like to pick people's brains really about this scheme. Is it worth it?

Apparently you can buy a house with 5% deposit and get a brand new home worth upto £500,000.

Does anyone have anymore information on this and is it worth it for the homebuyer in the long run?

OP posts:
crashdoll · 19/03/2013 13:35

Will banks really offer such a high mortgage for first time buyers? I'm looking at buying my first place in the next year or two and I'm utterly clueless as yet.

CogitoErgoSometimes · 19/03/2013 13:38

Information Link

From what I've read, it sounds like a good scheme for first time buyers. It's only available on certain new homes built by companies that have signed up to the scheme and borrowers have to meet the usual criteria of regular disposable income and a good credit rating. So if there's a qualifying project near you and you think you're a reasonable risk it's definitely worth checking out.

CogitoErgoSometimes · 19/03/2013 13:40

Here's a Comparison Site listing mortgage companies that offer the scheme.

MakesCakesWhenStressed · 19/03/2013 13:43

We're on one of those and it was a god send. Been bugger a few months now and love it. what did you want to know?

Skelacia · 19/03/2013 13:52

It does sound like a great scheme but to buy the only house available in our area we'd still need a deposit of £21500 which, with my rent at £1300 a month, will take an age to get near. :( I guess the South East isn't for us for much longer!

ClimbingPenguin · 19/03/2013 13:59

Do nice new builds actually exist though?

Original poster
12345FishAlive · 19/03/2013 14:08

Thanks for the replies. Tbh, it sounds too good to be true. Thanks for the links cogito, the second link is particularly helpful.

makescakes do you mind me asking, do you have to earn a certain amount to get on the scheme? And if you pay a small deposit, does it mean the monthly mortgage repayment is really high?

I've found a scheme in my city (amazingly) and the location is perfect, next to a good secondary and to the city centre. The only problem is I'm not working ATM, and my dh's salary is at about £20,000. I have about £6000 savings and my dad said he will help with a deposit too if needed.

I'm just worried if we pay a small deposit the repayments are going to be way too much. I think the houses will be priced around the £250,000 mark.

OP posts:
Original poster
12345FishAlive · 19/03/2013 14:10

climbingpenguin haha, I'm thinking if we sell up within a few years and house prices rise, we could afford an older more solid house. At least it's a foot on the ladder some how. Iyswim.

OP posts:
Frogman · 19/03/2013 14:21

123445 - you do realise that you will be paying well over the odds for a new house don't you? New houses have a premium on them (for some strange reason). House prices aren't going anywhere for a long time but a new house will certainly only go down in price.

You will be stuck there for a long, long, long time.

The only people the Government are helping with this scheme are the housebuilders.

Original poster
12345FishAlive · 19/03/2013 14:36

Thank you frogman, I did read that somewhere. Do you know why the value decreases on a new house as soon as you put the key through the door?

I don't think you can get the first buy mortgage for an older house. Unless anyone knows otherwise?

OP posts:
MakesCakesWhenStressed · 19/03/2013 14:37

12345, yes, you have to qualify for the scheme, so be earning a certain amount and have some kind of guarantee from employer that that is likely to continue. Obviously the higher percentage mortgage you have the higher monthly repayments you'll have, but we're still paying less per month for this property than we would in rent for something similar in this area (also the SE).

Our new build is lovely. Energy efficient, attractive, decent sized rooms (we have a super king size bed and still have plenty of room for other furniture!), fantastic bathroom with a good finish. The garden is a bit small, but we're right near a park, so not too bothered about that.

It beats all our rented properties into a cocked hat and our bills have dropped massively.

MakesCakesWhenStressed · 19/03/2013 14:38

(and that's coming from someone who was brought up in Victorian and Edwardian properties and whose dream house is a Georgian villa, so not exactly dying to live in a new build)

MakesCakesWhenStressed · 19/03/2013 14:38

Oh, and the value decreases for the same reason as it does on new cars - some people put a premium on something that has never been lived in/driven before.

laracroft2001 · 19/03/2013 14:39

I've done it. It is too good to be true in our case. Cost a bloody fortune to buy a larger share, the 'rent' starts low but goes up, and there may be a service charge involved which is extortionate.

I wish I just waited longer and saved up more.

Original poster
12345FishAlive · 19/03/2013 14:43

We're also in the SE makescakes, and will never be able to afford a house any other way in our city. So do you know how they allocate the houses? Because I assume they must have a lot of interest in the houses.

OP posts:
maddening · 19/03/2013 14:48

First buy I think the government lend you 20% deposit and you provide 5% - so you have a 75% mortgage. You do have to fit certain criteria.

crashdoll · 19/03/2013 15:13

maddening Stupid question - how do you pay back? What is the interest rate?

CogitoErgoSometimes · 19/03/2013 15:27

The comparison site has interest rates around 4.5% ... I'd assume it's a straightforward capital and interest repayment same as any other mortgage.

MakesCakesWhenStressed · 19/03/2013 15:28

12345 - in our case it was circumstance (we had the money) + need. I'd recommend ringing the people running the scheme in your area and asking them about it. These schemes generally have a financial advisor they recommend who you might be able to talk to. It's not in their interest to end up with buyers who will default on the mortgage.

PinkParsnips · 19/03/2013 18:09

We bought our 1st house on the Homebuy shared equity scheme.
It was a scheme for 'key workers' DH was in the army at the time.

Basically we own 100% of the house but only had to get a mortgage for 70%. After 5 years we owe the builder their 30% loan back (which acts as your deposit) or we have to start paying the monthly interest, something like 1%.

Its worked well for us, we've no chance of paying the deposit back and staying after 5yrs (nor do we want to, this house has always been a stepping stone for us) but its meant we can continue to save up a deposit for the next house and will top it up with what we will have paid off the mortgage and will make on the sale.

We have been very lucky though that the value of our house has held for some reason.

One downside is that you can only get a mortgage with certain companies and dont get a very good interest rate.

Its not totally ideal but if like us you'd have struggled to save up a huge deposit its a good option.

HTH

maddening · 19/03/2013 18:18

Crashdoll - I didn't look in to it further as we have a mortgage on our property and would want to move it and turn ours to buy to let so not eligible (plus no deposit - our situation caused by negative equity as bought in 2007 - can't sell so need to save deposit and rent ours and buy new property - bonkers but we don't want to lose our mortgate as would have to sell at loss and then rent still owing thousands

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