Meet the Other Phone. A phone that grows with your child.

Meet the Other Phone.
A phone that grows with your child.

Buy now

Please or to access all these features

Property/DIY

Join our Property forum for renovation, DIY, and house selling advice.

Help to buy!

13 replies

July2020baby · 22/10/2020 20:58

Hi,

So we’re looking at buying a house for 505,000 with borrowing 10 percent from the government on help to buy. We have £87,000 deposit and are just shy of £12,000 to be able to afford it outright!

Is the help to buy worth it, will I be able to pay off the 10 percent in 5 years before interest rates hit? I find it so confusing

Thanks !

OP posts:
July2020baby · 22/10/2020 20:59

Not outright but without the help to buy I mean...

OP posts:
Bluebellbike · 22/10/2020 21:04

Your % to repay in 5 years may be more than it is now, so factor that in. The house is valued (at your expense) after 5 years and if 10% of the value then is more than it is now you have to repay the higher amount. Solicitors fees to cover all this are also added to your costs then. So look carefully at what you are signing up to.

July2020baby · 22/10/2020 21:09

Still so confused. Sounds like I’ll owe the government 50,000. Do I have to save 50,000 in 5 years?!

OP posts:
Nervousseller2020 · 22/10/2020 21:19

No. Ten years. After 5 years you start paying interest. You need proper advice on how it works.

We will be adding the gov loan to our mortgage when we re mortgage at the end of our fixed deal

JoJoSM2 · 22/10/2020 21:23

The point being that if the house goes up in value to, say, 600k, you’ll owe 60k not 50 any more.

Having said that, 505k is the price of a brand new house. You’ve got 87k so that’s 20% of 435k. You should be able to get a nice house for that? In a few years, you can always move up the ladder but at least you wouldn’t have the hassle/issues of Help to Buy.

July2020baby · 22/10/2020 21:40

I live in quite an expensive area and it’s a village so not much comes up on the market.

This is a 4 bedroom house and I quite like it. It’s in a good location and is exactly what we’re looking for space wise and most importantly location wise, we’ll struggle to find something in the village for 500, houses seem to be either cheaper (were selling ours for 300) or 700/800 thousand. Not even any “doer upers” are coming up plus I have a 3 month old and a 3 year old and I don’t want the hassle.

OP posts:
Maybenexttime08 · 22/10/2020 21:47

At the end of the 5 years if you can't pay it all off you only pay the interest on the loan. We are taking a much larger help to buy loan and if we only pay half of it off we will have an extra £150 a month to pay, therefore we decided it was worth it to get the house we want.

July2020baby · 22/10/2020 21:58

Does it go up after 6 years, 7 years etc etc? What if interest rates go sky high over the next few years to with everything going on ?

OP posts:
JoJoSM2 · 23/10/2020 10:23

Interest rates aren’t going anywhere just yet but if they go up when the initial period is up on your house, you’ll have very high monthly payments. It’s generally only advisable for FTB who are v short of deposit but can see their earnings increasing quickly in the next few years.

I’m surprised you’re eligible for help to buy if you’ve got a house already.

BrieAndChilli · 23/10/2020 10:30

This is the problem with help to buy! It should just be to help first time buyers get on the ladder not for people who already have a house to buy a bigger house. All it’s doing it’s pushing up prices. You can now afford a £509k house, without help to buy you would be getting a £450k house, if everyone could afford the same then prices would naturally drop to £450k

WombatChocolate · 23/10/2020 15:44

There will be houses you can afford without Help to Buy, and taking the long view, these will be better value.

If you use Help to Buy, you need to appreciate that over time, you will pay more. There will be costs involved in re-mortgaging and legal fees, plus the intitial orice you pay is inflated. Yes, it means that you can have that particular house today and the mo they payments will be affordable for you, but overall you will spend significantly more.

The question is whether you are willing to do that. Some people are prepared to do that when the hey could afford a non-help to buy house and avoid those extra costs. Why? Because they are more interested in having the thing they want today soon and are willing (or don't really think about) th pay significantly more overall because on a monthly basis is is affordable and they either aren't worried about overall cost or struggle to compute the overall costs because they are long term and so feel less real. Some people also will do this because they really like new builds and either don't like the idea of there being a chance of needing to do work on an older house, or lack the funds to feel confident they could pay for such works. Often this system appeals to people who have only a small deposit and/or who know that they will never have a big chunk of savings behind them to fund bigger expenses, so prefer to have a clearly set mo they outgoing that they know they can afford, even if it means paying more overall, to avoid surprise big payments that they mig struggle with.

I think there is a place for Help to Buy when it enables someone to move from rented to homeownership when otherwise they could not afford anything even after saving for a good while. However, I think lots of people go into Help to Buy who could avoid it and avoid the significant extra costs that come with it. Lots of people could either save for a few months more to boost their deposit to a size large enough not to need help to buy, or look at other non newbuild properties that might be cheaper and they could afford without help to buy. I think it's a shame that lots of people get drawn j to the scheme and perhaps are tempted by a bigger house (and much bigger cost overall) than they really need or can afford over the long term. They often realise the impact of their choice a few years in, but are blinded at the time by the offer of a bigger, new house and affordable monthly starting payments.

So definitely take the long view and make sure you request written details of all the costs involved up first of help to buy along with costs you would incur at later points by remaining in the scheme (interest after 5 years) or by re-mortgaging and do calculations for a variety of different house prices in 5 or 10 years, bearing in mind new builds often decline in value for a couple of years and also we are heading into recession and lots of job losses.

If you can move and avoid it, I'd work pretty hard to avoid it personally. However, clearly lots of people choose this each year and it seems to work for them, but go into it with your eyes wide open.

MumMT18 · 23/10/2020 16:29

We are in the process of selling our house now. We have been in the house 4 years so coming to the end of the 5 year interest free. If you decide to sell the house you will pay back the percentage of the house value but this is based on their approved surveyors so if you sell your house for 600k but they value the house at 650k you will pay 10% of the 650k so you may end up paying more than you accounted for.

July2020baby · 23/10/2020 17:52

The new build appeals to me because we have two young children and it’s more space and the location is ideal.

My partner has quite a good high paid job and I will be back at work within 5 years as my kids will be at school.

Anything less and our budget won’t get us much where we live

OP posts:
New posts on this thread. Refresh page
Swipe left for the next trending thread