Active discussions

Meet the Other Phone. Only the apps you allow.

Meet the Other Phone.
Only the apps you allow.

Buy now

Please or to access all these features

Talk
AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

help to buy is stupid

29 replies

ethicalsusan · 09/09/2015 17:46

Lots of people on 100k+ have used it and if anything it has pushed prices up even higher. All it seems to be is helping people get into greater debt.

Friend was going on about how marvellous it was, just seems very shortsighted and pours fuel on the fire. I thought lending money to people that couldn't afford it was he whole problem anyway?

OP posts:
wasonthelist · 09/09/2015 17:49

No, the point was to put money into the pockets of the Government's friends.

Original poster
ethicalsusan · 09/09/2015 17:50

Well only if those friends are housebuilders.

Helping people on 6 figures shows what a mess the market is.

OP posts:
cestlavielife · 09/09/2015 17:57

stores problems for future - have to start paying fees from year five on the equity loan but "Your payment of fees does not contribute towards repaying your Help to Buy equity loan. If you staircase or want to make full repayment of the equity loan, any fee arrears must be repaid at the same time. "
www.helptobuy.org.uk/docs/default-source/default-document-library/help-to-buy-equity-loan-buyers-guide.pdf?sfvrsn=4

would work if you intend to sell on within five years...

NotSayingImBatman · 09/09/2015 18:01

DH and I bought with help to buy, we should have saved half of the equity loan by the time the five years is interest free and we'll just remortgage for the other half. Ne bosh.

NotSayingImBatman · 09/09/2015 18:02

*five years of interest free is up. Stupid phone.

QforCucumber · 09/09/2015 18:06

not exactly our plan too, but then again between dp and I we earn a combined income of ??45k so nowhere near the 6 figure salaries discussed above. 160k house, 32k equity loan - looking to remortgage for any amount we haven't saved by the time the 5 years is up.

NotSayingImBatman · 09/09/2015 18:09

Sounds like we're in a similar financial position, Q. Certainly not earning six figures here either!

Spartans · 09/09/2015 18:16

op can you provide the figures of how many high earners have used it. None of the ones I know have done. The ones who have used help to buy have been lower earners.

It's helped some of my friends, but I do agree about it pushing up process etc

wasonthelist · 09/09/2015 18:22

Well only if those friends are housebuilders.

That's what I meant - the governments real, actual friends, rather than aspirant voters who think they are the governments friends, but really aren't.

www.businessinsider.com.au/barrett-development-results-house-price-inflation-2015-9

ghostyslovesheep · 09/09/2015 18:27

not quiet grasping the issue - my last house was help to buy - sold it before the 5 years where up - paid back 20% of the sale price - job done

Original poster
ethicalsusan · 09/09/2015 21:37

yes I thought you did mean that. Agreed.

Story is from the mail.

Well for some it might work, but seeing as promotions aren't what they used to be I'm not sure how most will afford to pay back the 20% in 5 years.

Some people have been messed over by schemes where they have too pay back the original sum or the % of the current value, whatever is greatest. This was on a scheme before htb that the developers started.

OP posts:
Allbymyselfagain · 09/09/2015 22:24

There seems to be two types of help to buy, equity and mortgage. I know it's cheeky but can someone explain the different., I think equity they loan you 20% so you only need a 75% mortgage on new builds only. And the other is just a 95% mortgage? House buyer is confusing me.

Oh and OP YANBU I read that report. If your earning over ??100k as a household you should be able to save your deposit.

UterusUterusGhali · 09/09/2015 22:27

I know it helped my DSis a couple of years ago, and it wasn't a new build.

The housing crisis on this country needs more than this though. It's rotten to the core.

sproketmx · 09/09/2015 23:44

I think it may be. It's only on these new builds and Mil bought her new build for 225 a few years ago, it's now on the market and she can't get it sold for 185. I bought my ex council house three years ago for 60 and just had it valued last week at 88.

OrangeFluff · 10/09/2015 01:42

DH and I bought our first house in February this year using the help to buy: mortgage guarantee scheme. We got a normal 95% mortgage, no loan to pay back in 5 years. It means that our lender only risks 75% instead of 95% as the government will pay the extra 20% if we default. To qualify for this we had to have extremely good credit, and a detailed affordability test.

OrangeFluff · 10/09/2015 01:44

Oh and ours isn't a new build, it's a 1950s ex council.

Spermysextowel · 10/09/2015 02:16

We bought our first flat with my dad as a guarantee. He'd also done the same for my sister whilst having his own mortgage. Things were a little less computerised then.
He knew that he'd never have to come good on his commitments, & he didn't. As interest rates hit horrific levels my sister, her partner, my husband & I got 2nd & 3rd jobs to meet the mortgage payments.
This seems to provide similar assistance but if you default then the cost is related to the tax payer. It seems too easy; are there no penalties?

helentheheron · 10/09/2015 04:31

Yanbu

blibblobblub · 10/09/2015 04:56

Orange we did the same last year, took a 95% mortgage. Luckily we didn't overstretch ourselves because I fell pregnant within two months Blush

We definitely don't earn ??100k.

Allbymyselfagain · 10/09/2015 08:17

Thanks orange. I'm going to see a mortgage advisor soon, it's nervy stuff!

QforCucumber · 10/09/2015 08:31

Ours is the equity loan on a new build (which has just been valued at 15k higher than what we paid so must have got a good deal)

5% deposit, 70% mortgage, 20% equity loan.

Can pay back the loan in full or in 2 lots of 10% of the value of the house at the time. We are aiming to have saved 10% and remortgage for the other 10% by the time our 5 years is up so we don't have to pay the interest and fees. yes, if the house value increases then we pay back more - but also if it decreases we pay back less.

If you default on the mortgage I don't understand how you think the taxpayer covers it? there is an agreement in the documentation that if you don't pay the interest or fees on the equity loan then the house can be sold and the amount taken from the sale. though it is our names on the deeds it is stated in the mortgage documents that we have gone through help to buy and that they have a legal right to the home if any defaults occur.

loads of other rules too, can't rent it out, can't buy another property while having a help to buy agreement.

OrangeFluff · 10/09/2015 13:49

Well if we default (which will hopefully never happen as we have not overstretched ourselves) then the property will be sold the same as any other mortgage. The government will only pay if the house sale does not cover the value of the mortgage (unlikely where I live).

Think of it as more of an insurance policy for the lenders. This link explains it better than me.

Good luck Allbymyself you'll be fine, just make sure your credit is excellent!

redstrawberry10 · 10/09/2015 15:04

I don't understand how you think the taxpayer covers it?

taxpayer covers the equity loan.

Yet another stupid idea by this govt. I guess they have a deep well to draw from.

QforCucumber · 10/09/2015 15:14

red initially, but then it's paid back? Either on sale of the house or remortgage, or they gain a profit in the charges of fees and interest after 5 years.
For dp and I it was the only way we could have bought our house, his parents put us up rent free to save the deposit - we couldn't have stayed there 6 years saving for the 35k required without the help to buy. And it'll be paid back - with extra, seeing as our house value has increased. Unless I'm being naive I really don't see how it's a bad thing, when done sensibly. Those on 6 figure salaries and buying extortionately priced homes with it I do think are taking the piss a little.

OrangeFluff · 10/09/2015 16:31

red In my case the lenders actually pay to be a part of the scheme, so if any defaults do occur and the house sale doesn't cover the value of the mortgage, then I guess the money will come from that. Seeing as how these types of mortgages are difficult to get, needing strict affordability tests and excellent credit records, then defaults shouldn't be as common as back in the days when anyone could get a mortgage without too much hassle.

I haven't been given any money from the government, I just have a normal 95% mortgage and pay it like anyone else with a mortgage.

I also agree with Cucumber that the Equity Scheme is a LOAN! It gets paid back plus fees and interest.

Swipe left for the next trending thread