governemt scheme mortgage...confused! what to do...

[confuzed90]

Ok so me and my partner, both 21 nearly 22, and are looking into buying first time. We have a nearly 3 year old together and I am 33 weeks pregnant with DS2. We are due to get married in july. Anyway..we have no savings and no deposit saved up..my partner has a good job, electrician and brings in a basic of about 30,000 a year, with overtime an average of around 34,000. This is before the dreaded tax. A month he gets 1800 after tax. We are looking into getting a house on the goverment mortgage scheme, basically the government pays 20% which is the deposit and the rest is the mortgage, this works out at 500 a month (we have found a house) for 5 years and then goes to 550. Paying back mortgage and government. I am a student, paramedic student but just started, another 5 years to go! Anyway what I'm asking is after all our bills (we are not in debt and everything we own is ours) after bills and childcare whilst I'm studying, we have 270 spare a month. That includes house insurance and what not being paid. Is 270 spare a month enough? We are going to try see if wed still get accepted by extending our mortgage to 35 years instead of 30 to reduce the amount we pay each month to 400, if this is done, then we are paying the same in rent as we would mortgage.opinions?

Is this a fixed rate mortgage? Its a very unsure financial climate we are in, remember the base rate is at the lowest point in hundreds of years and it will at some point go back up. Even a small rise to a couple of percent will really raise your mortgage payments.

You can get by on 270 if that is after everything (have you factored in fuel, mot, tax etc) - but it doesn't leave you any wriggle room. What happens if the boiler goes, or the washing machine breaks down etc.

I'm a believer in buying a house if you can rather than renting, but considering how tight things are, I'm not sure in your case. £62.50 pw to feed and clothe a family of 4 and maintain a property is really flying by the seat of your pants.

I think I would err on the side of caution and stay in rented, at least for the time being (I don't know anything about the government scheme, is it for a limited time?)

You are still very young, and the property market is certainly not going to shoot away and leave you behind in the next few years. I would concentrate on starting to save as much money as you can so that when you are earning more you have something to put down.

The best way to answer your question whether £270 spare is enough is to try to live on that for a month or two. I agree with the above that you should build a little wiggle-room into your budget in case interest rates go up. IME home-owning, as opposed to renting, often comes with extra costs that you don't anticipate. If you can set aside 5%+ (£90+) of your take-home into a savings account each month as well as pay the mortgage and all the bills, you'll probably find you need it at some point. Having once had to find £2000 at short notice to replace a central heating boiler, I'd have been stuck without savings.

I could be mistaken, but don't you still need a small deposit with these schemes? I took one on my house around 2 years ago and although the government paid 30% my mortgage company still insisted I put down 5% of my own deposit. I know the scheme has changed slightly since then however I would have guessed this bit would have stayed the same? All the companies who were prepared to offer shared equity mortgages were the same.

Thank you both for replying, well the house is brand new, just been built never been lived in so I'm pretty sure the boiler would come with a guarantee?and like I said, we really would have the same amount of money spare each month if we stayed in rented, which is basically dead money.its such a hard decision,

rockchick1984 sorry just saw your post, no there has been a new scheme introduced to help people with no savings and deposit get onto the property ladder, this is with bellway, no deposit at all.

have you a link OP?

No. Sorry! X

Have you included council tax? Remember you pay a premium on new builds so if you are going to want somewhere bigger you may find you have less equity than if you bought an older house.

If you can live within your means & not want the latest things to go with your new house then go for it but it is easy to spend a lot of money kitting out a house, things like curtain poles, light fixings, garden furniture etc etc. Does the part the government pay stay at the same interest for the mortgage or could it go up?

Stays at the same interest, we currently are renting so we have all the furniture at the moment. Eventually yes I'd aim to get new bits but if I buy a house will be wanting to live there for many many years to come.things take time so I know that I'd have to wait to decorate how I want and get things I want for it

new builds often dont even supply turf!

We have to pay solicitor fees, it comes with turf,carpets,laminate wood flooring in kitchen and a cooking.

We managed to convince them to also supply carpet, fridge/freezer, washer/dryer and upgrade kitchen and bathroom free of charge, so potential to get some of your new stuff thrown in free!

Is this the scheme where you have to pay back the extra 20 percent regardless of if your house has plummeted in value in the meantime? When you do your sums, factor in a 10-20 percent depreciation and see how the sums look then

Article today about the dangers of neg equity with one of these schemes
www.telegraph.co.uk/finance/newsbysector/constructionandproperty/9137991/State-backed-mortgage-scheme-threatens-negative-equity.html

On the plus side, you'll have the benefit of the NHBC guarantee, so if anything major happens to the building in the next 10 years you will be covered.