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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

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Original poster

Help to buy

28 replies

tiar · 07/09/2018 10:32

Hey guys I'm looking for so advise please 😃.
My partner and I are looking to buy our first house in the near future and I am torn between to options. First is I was looking into a help to buy scheme like shared ownership if i was to choose this option i would have enough money save by december and the second option was to save up a little longer and raise enough money for a 5% deposit for a mortage that i would own all of.I was wondering if anyone could give me some advise on my options maybe some pros and cons 😃 as i have heard mixed feeling about help to buy but i dont really know that much about it cheers guy.

OP posts:

Bibidy · 07/09/2018 10:44

Hi tiar,

I considered these options too, but in the end decided to go with buying traditionally as there seems to be a lot of risk with the Help to Buy and Shared Ownership schemes.

I've read that Shared Ownership properties can be very difficult and slow to sell (depending where you live), and you have to pay the full costs of a house purchase every time you want to buy another share (staircase). I knew that I'd never be able to afford a deposit for the next share on top of all the usual costs of buying, like the survey, valuations, solicitor etc.

The Help to Buy loan from the government is only available on new builds so wasn't suitable for me.

I would say it's probably a better bet to try and find something suitable you can buy yourself with your 5% deposit, as long as you're able to borrow the other 95%. My issue was that my wages aren't high enough for a bank to lend me 95% of the price, but if yours are then you shouldn't have a problem :).

BurgerHill · 07/09/2018 10:51

I know people that have purchased shared ownership properties and regretted it.

In regards to the savings, you could look in to a lifetime ISA as you get a 25% contribution bonus each year and can use it to purchase any property with a value of less than £450,000. If you google it you'll be able to find the places that offer them though there aren't many. Mines with Skipton and it's been super easy to use

Original poster

tiar · 07/09/2018 10:52

Hey thanks for that advice 😃 I'm not sure if our wages would or wouldnt be enough for a 5% as I haven't seen a mortage advisor to ask it was just another suggestion to get me on the ladder quicker 😃 it's a shame about help to buy really as on paper it seemed like a good option for us

OP posts:

BubblesBubblesBubbles · 07/09/2018 11:00

We looked into the help to buy and decided against it. So have purchased a smaller house within what we could borrow without.

Down side to help to buy is it’s for new builds only and these are often overpriced to start with, and I wasn’t keen on ‘borrowing’ the extra for example ‘60k’

What happens if in 5 years the housing market has dropped not only will you be in negative equity you’d also have to find the repayments for the help to buy equity loan.

The market around here has completely stalled, nothing above 180k is selling.

With leaving the eu coming as well we decided it wasn’t a good idea.

Original poster

tiar · 07/09/2018 11:22

Thanks for all your advise I wasn't trying to to purchase help to buy home so that I could afford a bigger or better property it was just so that i could get onto the property ladder quicker I was looking at 😯hr shared ownership resales properties as they are cheaper but few and far between 😯 I was only looking to buy a house of no more than 270000 that's why I was torn between help to buy or 5% deposit if I could get one

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BlueBug45 · 07/09/2018 11:36

Don't go near shared ownership.

I've heard of stories of people ending up homeless due to the yearly hike in service charges and rents on the part of the property they didn't own meaning they fall behind in paying them as their wages don't increase. Some freeholders see service charges as a cash cow and put them up lots every year. While leaseholders can have the same issue they don't have a rent increase to deal with as well.

maddening · 07/09/2018 11:50

We did help to buy on a new build.

95% mortgages are harder to find and more expensive in respect of the interest rate.

We have a 75% mortgage at 2.5% for 5 years and the help to buy portion is interest free for the first 5 years.

maddening · 07/09/2018 11:52

Ps we own our home freehold

Pleasedontdrawonyoursister · 07/09/2018 11:57

We have done shared ownership twice. Our first property sold very quickly at the full asking price. We had about 12 people interested in the first week. Our rent is massively reduced and we pay in total (mortgage/rent) around half what the private rental cost on our property would be. Maybe we are lucky, these properties are In high demand in our area (south east) and we haven’t regretted it once. The only issue we had was the huge amount of paperwork involved in buying/selling them.

Original poster

tiar · 07/09/2018 12:16

I'm in two minds now I'm in the south east too 😃 I'm a bit worried about doing it if I have to pay a lot in service charges but sound good as I can get on thr ladder quicker ect has any of you guys brought a property with just a 5 % deposit I was looking at doing this but not on a new build just a regular house 😂 if that makes sence I haven't spoken to any mortgage advisors so I thought that say you were looking to buy a house for 250000 you would be able to put a 5% deposit down I didn't realise this was a rare thing to come by if you are lucky 😯😯 I just thought as long as you could afford the months repayments and had the 5% deposit that would be OK naivee 😯😯

OP posts:

Original poster

tiar · 07/09/2018 12:24

Also what if I brought out a 50% or 75 % share in a part rent part buy as you only have to put down a 5% deposit on it I would be able to get onto the ladder quicker and i had the other 5% deposit money in savings to buy the other 50% after a couple of months then I would own the whole property right? As that's could be easily done I'm not sure if I just sound really stupid guys so thanks for all your advise I just have so many questions going around in my head 😃

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BrownianMotion · 07/09/2018 12:38

Absolutely stay well clear of both shared ownership and help to buy.
I am horrified that such ideas were allowed to become reality. They will both become a PPI type scandal one day in the next few years. Too many people have got lured in by the shiny marketing gimmicks. But as somebody that has an economics and finance background, i advise against.

Racoon100 · 07/09/2018 13:09

5% deposit mortgages are harder to get as you need an excellent credit rating and higher income (they have a higher interest rate so repayments are higher each month). You should go to a mortgage advisor to see what you could get with your income and deposit

OftenHangry · 07/09/2018 13:22

I got 5% deposit mortgage. There is quite a choice.
I agree with PP that interest rates are higher, however, you just change a deal or remortgage as your fixed deals finish and in few years you will be on great rate. I took a house where we could add value and we did so now when I will be switching deals I know I will get under 2% interest instead of 4%. It still worked out cheaper than what our rent was before.
Speak to an independent broker. Mine found great deal including cashback and they were ok with a single applicant.
Do work your credit score up. I heard that getting anything like this with under 800 points is bit hard.
Wouldn't touch shared ownership and new build after all that horror stories I've heard.

OftenHangry · 07/09/2018 13:23

Just an FIY everyone.
Some providers started 100% mortgages again... Thought it was banned after the recession

Want2bSupermum · 07/09/2018 13:26

If you need to do shared ownership to own you can't afford to own. Be patient. House prices in most of the country are declining slowly. Save up more while you wait.

RidingARollerCoaster · 07/09/2018 13:30

Am interested in a few people’s responses - what are the risks with shared ownership?

Want2bSupermum · 07/09/2018 13:32

When you have shared ownership, the part you don't own can increase their portion of costs at an alarming rate. They can also set the price of buying more of the property very high meaning you can never get ahead of controlling your housing costs.

Always try to buy freehold.

Dreamingofkfc · 07/09/2018 13:33

We were tempted by shared ownership to but the cost of the mortgage and then rent on top was alot more than the mortgage we now have. One friend has shared ownership and regrets it - it's a flat but can't afford to buy more of it and it's not selling so they feel stuck. Other friend was refused to be allowed to buy the remaining bit of his house so is stuck paying rent which is increasing.

Help to buy seems so dodgy to me, the houses are new but are valued way too high.

We had bad credit, went to a broker, sorted out bits and went to a high street bank and went through options. We were originally going to get 5% deposit but managed to borrow further 5% to get a much better deal

LaurieMarlow · 07/09/2018 13:36

Well, in the interests of balance, we did shared ownership and it worked out brilliantly.

It meant we could live in a much nicer area than we could have afforded otherwise and in a beautiful flat.

We sold super easily (had 6/7 buyers interested) and made a very healthy profit. We never staircased. The administrators of the scheme were a pita throughout, but never caused any serious trouble.

However, we sold in early 2016 and in a very naice part of London. A falling property market might look very different.

mistermagpie · 07/09/2018 13:44

I bought my house using help to buy. The plus side for me was that I wanted the house anyway, so having help to buy was just a bonus. The major factor though, is that I live in Scotland where you make no repayments on the H2B loan ever, it is interest free and only repaid when (if) you sell the property, which I'm not planning to.

I wouldn't have used the scheme in England and shared ownership just seems like a bad idea.

Original poster

tiar · 07/09/2018 13:47

Thanks everyone I can afford a mortgage and everything that comes with it i wasnt thinking of shared ownership because I can't afford a mortgage out right probably should have said that sorry I was thinking of doing it as it would mean I got onto the property ladder quicker as I wouldn't have to save as long for my deposit I'm saving about £2000 a month I just thought when I looked into help to buy in wouldn't need to save up for a deposit for has long as I would if I were do it the "traditional way"

OP posts:

LaurieMarlow · 07/09/2018 13:51

I think if I were you I'd just sit it out and buy in the traditional way. All these schemes have a huge amount of paper work, can cause a lot of stress and have additional risks on top of traditional buying. Not worth it just to get on the ladder a bit sooner.

Unihorn · 07/09/2018 13:58

@Want2bSupermum
How do you figure that out? Rents are often more per month than the average 95% mortgage. I don't think it's reflective of people's ability to buy a house.

Bombardier25966 · 07/09/2018 14:06

Shared ownership worked for me too. As with anything you need to check the terms of the offering carefully. Mine had no service charge or ground rent (house not flat), and increases on the rent were capped at the inflation rate. It was initially set at 2/3 market rate, so would always stay below market rates.

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