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Original poster

Buying a house with the new government scheme

44 replies

Buswanker · 05/08/2013 23:05

Does anyone know anything about the scheme?
I know it starts in January and the aim is to help people with a deposit to buy a house but does anyone have further information?
Thank you

OP posts:
throughgrittedteeth · 05/08/2013 23:14

Is this the help to buy thing? If it is then its started already.. 30% loan, interest free for 5 years, repayable for the length of the mortgage I believe.

throughgrittedteeth · 05/08/2013 23:15

It's what we've just done, it's a pretty good deal. It only applies to new houses though..

Original poster
Buswanker · 05/08/2013 23:22

I think the scheme that starts next year is for all houses.

OP posts:
Original poster
Buswanker · 06/08/2013 08:24

Its good to hear it worked for you, thanks for your reply. I hope it can work for us, other than a bank robbery we would find it difficult to save for a deposit!

OP posts:
dotnet · 06/08/2013 08:30

Yes, the scheme starting next year (Jan) isn't for newbuilds only. The deposit approved people will have to raise, is 5% of the purchase price. Buyers need to be a very safe bet, as there's a government guarantee up to a certain level against default.

Original poster
Buswanker · 06/08/2013 08:38

Do you know anything else about the process? We have good credit and we don't have a huge income at all but I am careful with money so dont spend more than we earn.

OP posts:
ihategeorgeosborne · 06/08/2013 09:34

You need a 5% deposit and the government will act as guarantors to the bank for 15% of the loan should you default. I don't think they actually give you money for a deposit with this scheme. They will just bail out the bank to the tune of 15% if you get repossessed. You will still need to be able to afford to borrow 95% of the value of the property. Am looking into this scheme myself. The cynic in me thinks that it will just increase asking prices and therefore won't be any help to first time buyers at all Hmm

Original poster
Buswanker · 06/08/2013 10:37

I did wonder why this goverment would actually help working families on lower budgets like us, does seem a bit good to be true, I am also suspicious.

OP posts:
specialsubject · 06/08/2013 11:40

the government are very keen to help borrowers and those with mortgages. That's fine, but everyone with savings is being screwed and has been for about five years now.

if you are in the favoured group make the most of it!

ihategeorgeosborne · 06/08/2013 11:54

I am in the savings group too special. I am trying to save for a deposit to buy a house. I would prefer to get some interest on my savings and buy a house when we have a big enough deposit. This government interference doesn't help anyone, except bankers and builders.

mizu · 10/08/2013 10:27

We are looking into it too (the January one) but we don't earn a huge amount and houses in this area are loads cos of the good schools.

We save £500 a month and struggle to do this.

I too agree though that in the end no one will benefit other than building companies and the banks Hmm

But I am 41 next year and time is running out........................

Think we will look into the options next year and see what we can afford, if anything.

Talkinpeace · 10/08/2013 17:46

It sounds like a disastrous idea to me - bargepole touch not a with

better to let house prices fall back to affordable levels IMHO

Original poster
Buswanker · 10/08/2013 19:15

My concern is it I heard it was available to anyone buying a house, not just people on lower incomes that are unable to save. I also thought the budget for it would soon be used up too if people buy more expensive houses in London etc.

OP posts:
Original poster
Buswanker · 10/08/2013 19:18

I know they say lower incomes but I think it means low in comparison to where you live so you cant afford to save so it might mean anyone can use it?!

OP posts:
mizu · 11/08/2013 11:21

So basically we will still have to take out a 95% mortgage and will be unable to make the repayments as they will be about £900 a month Sad

I thought the government would be stumping up 15% of the deposit that would be repayable after 5 years, looks like that is not the case.

It is all well and good to say let house prices fall but when will that be?

Talkinpeace · 11/08/2013 13:04

Well as 20% of mortgages are currently going to buy to let and many other houses being bought cash buy businesses and overseas buyers, sadly normal UK residents are pretty stuffed.

Original poster
Buswanker · 12/08/2013 09:43

I guess I will stop browsing Rightmove for houses we cant afford then. And hope a rich aunty dies peacefully in her sleep after a long, happy life and leaves us 30 thousand pounds.

OP posts:
financialwizard · 12/08/2013 09:49

The Help to Buy scheme is currently for brand new houses only. You get a 20% deposit from the government and have to have 5% deposit yourself.

In 5 years you will start to pay interest. For the first year it is 1.75% after that it goes up by the RPI. Or you can buy the government out, if you can afford to do so.

January 1st see's the second hand houses come into it. Will be the same deal for include second hand homes too.

Hope that helps.

Caster8 · 12/08/2013 09:54

Talkinpeace. Do you mean that it is a bad idea for society, or that you think it is a bad idea for first time buyers to personally leap in to?

mizu · 12/08/2013 09:58

the same deal financialwizard?

I hope by your name that you are indeed a financial wizard and are right and correct and know everything there is to know about all things financial and therefore we may be able to buy next year Grin

Will have £10,000 by next April (have £6,000 now) and am now officially sick of renting which I have been doing forever.

Talkinpeace · 12/08/2013 12:42

caster8
its just helping to keep the housing bubble inflated without dealing with the real issues.

  • developers have 400,000 plots with permission, ready to dig today : but if they did, prices would fall so their profits would drop, so they keep land banking
(cure by abolishing renewal of planning permission for greenfield sites)
  • the UK has the most lax laws in the world about overseas buyers so much of London is being bought speculatively by rich people from countries with unstable currencies
AND because they are not UK resident, they are not taxed on any income they make (cure : automatically multiply the rates bill on any building above band E without a UK electoral roll person on the deeds)
Caster8 · 12/08/2013 14:18

Talkinpeace for primeminister!

Do you think it is or will be a good idea for first time buyers?

Talkinpeace · 12/08/2013 15:03

No.
Because unless they know they will be in that house for at least ten years they have a high chance of negative equity.

I bought my first house - 3 bed terrace in Kent for £30,000 in 1987
DH was earning £10,000 in a run of the mill graduate job I was earning £5000 in a dull dull temp job

House is now around £150,000 (x 5)
Dull graduate Jobs are around £25,000 (x 2.5)
Dull temp jobs are around £15,000 (x 3)
therefore property is unaffordable

its the multiples that must be brought back into line.

Caster8 · 12/08/2013 15:10

I used to read HousePriceCrash from about 2008 to 2010.
The HousePriceCrash didnt exactly happen, but it has slithered. Is that a fair assessment.
I suppose I am a bit weary of waiting of a crash really, and am aware that house prices are going up in a few areas.

Do you think that the great crash will still come?

And perhaps, do you think that the magic 3.5 average will ever come back. Does it have to?

How far back does the 3.5 go back in history. Was it just say that between 1970 and 2000.

[am really asking on behalf of my next generation. 1 of them may be lining up soon - serious boyfriend and all that]

Talkinpeace · 12/08/2013 15:16

HPC have unbanned me so I can read it again!
There will be no crash.
It would be politically disastrous to force negative equity and repossession on millions of "hardworking families"

But net disposable incomes are dropping every year.
Mortgage companies are squeezing the rules.
THe only thing keeping the property market moving is Buy to let and offshore capital.
BUT
HMRC's wheeze for September is going to be to trawl back through the unexpurgated Land Registry data and slap CGT charges onto lots of landlords.
Also, as the benefits cap kicks in, it should start to reduce rental costs in city centres

What should happen is that house prices should stay stable for around 15 years - which with inflation at 3% a year is a 40% drop in real terms
then the multiples will start to go back into line