Help to Buy - 5% Deposit, 20% Goverment Deposit, 75% Mortgage.

[silverzx]

So... Following choosing not to be a pikey...

Help to buy schemes.

Who’s got one (if anyone)? Any first hand experience they care to pass on that won't be found from research alone?

I've knocked this little table up, total house price, deposit required, governments contribution, mortgage amount, borrow amount and repayment based on % over 25 years.

Total            Deposit        Gov20%       Mortgage    3.5% 25yr            5.0% 25yr            6.5% 25yr
£200,000     £10,000      £40,000        £150,000    £225,281 £751    £263,006 £877    £303,843 £1,013
£190,000     £9,500        £38,000        £142,500    £213,226 £711    £249,035 £830    £288,651 £962
£180,000     £9,000        £36,000        £135,000    £202,753 £676    £236,759 £789    £273,459 £912
£170,000     £8,500        £34,000        £127,500    £190,738 £636    £222,729 £742    £258,267 £861
£160,000     £8,000        £32,000        £120,000    £180,224 £601    £210,452 £702    £243,075 £810
£150,000     £7,500        £30,000        £112,500    £168,960 £563    £197,229 £658    £227,882 £760
£140,000     £7,000        £28,000        £105,000    £157,696 £526    £184,146 £614    £212,690 £709
£130,000     £6,500        £26,000        £97,500      £146,432 £488    £170,993 £570    £197,498 £658

This leads me to ask, if say with help to buy that I'm enquiring about I take the Halifax mortgage which is fixed 5 years at 3.5%, does that mean I'm borrowing a fixed amount of £135,000 on say a £180,000 house?

Or does the amount I'm borrowing fluctuate throughout the 25 years (or is that just the interest that fluctautes)?

I'm just confused if you borrow a FIXED amount e.g. the £135,000 I need and then repayments are completely dependent on interest rates so you've still technically borrowed £135,000 and the interest rate decides how much they get to take off you?

As an example, if I take the £180,000 house, borrow £135,000 and get 5 years at 3.5% then that rises to 5% for the last 20 years, does that mean I'll pay:

£676 PCM x 5 years = £40,560.
£789 PCM x 20 years = £189,360.
Total of £229,920 over 25 years for borrowing £135,000.

Any hidden costs? Solicitor fees? Stamp duties? Are early repayments capped? I'd like to repay as much as possible at the start.

This then leads me on to should I buy a 2 bed semi for £157,000 or stretch (if mortgage company allows) to a 3 bed semi for £188,000?

Here's some of the houses in question:

3 Bed: Link







2 Bed: Link








I'm going to be asking the housing company all these questions but thought I'd put it forward for discussion anyway.



 

[powerandtorque]

"Fixed" means that the interest rate and thus monthly payments are fixed for the first x years.

After the fixed term, you'll likely be moved onto a "tracker" mortgage that the monthly repayment will rise and fall depending on the interest rate.

You'll likely find that you'll be limited what you can overpay on a fixed rate mortgage without penalty during the fixed term part of the mortgage, but check the small print as it'll vary between mortgages. On mine I could overpay up to 10% for example.

There will likely be hidden costs - mortgage setup fee and solicitors being two.

Only you can answer the question regarding 2 vs 3 bed - if the 3 bed isn't over-stretching yourself then arguably that's the more future proof, but equally, you need to think about quality of life and affordability if anything were to happen - losing your job and not being able to find anything of the same salary for example. I went 2 bed and things worked out well with employment etc and I was able to repay the mortgage within half a dozen years, but downside is that I now need more space so looking to move.

Hope that helps.

[Seb_Ryan]

Im with the halifax for mine, after the time of fixed rate has ended you just refix it, this is just the interest amount, not the amount youve borrrowed, solicitor fees you will have to pay before you complete the sale obviously, these are around £1500 by me.
Youll also have to pay 360 ish upfront to halifax for survey.
Repayments arent capped as far as i know, but if you can afford to pay more then do it that way, less time you borrow for the less interest you pay.

Halifax will give you 4x amount of your yearly wage.

I was advised against the 5% because of extra fees etc and i was in the position to pay 15%, but it means my interest rate is fixed at 3.15%

[Paul Baldwin]

Hi Trent :-)

just make sure you don't overstretch yourself mate. Personally I wouldn't get into any government scheme that meant they had their dirty little mitts on anything I "owned". IIRC they also up the rate you have to pay back the government in some of the scams they run after a set number of years because it assumes you will be earning more at that point whether you are or not.

Here's some food for thought too http://blog.moneysavingexpert.com/2010/1...ince-1694/

The current climate is VERY unusual. Keep in mind that historically the average interest percent rate is about 7%. Over 25 years things can change dramatically. My old man lost our house to LLoyds in 1990. He re-built it for cash and then ended using up it has collateral for his business, clever boy. He was paying 15% interest when he finally threw the towel in. They took the house and sold it for 50K less than the asking price to claw their money back and left us totally destitute.

The shorter the term you pay it off in also has a massive effect on the overall amount you pay back. Find a mortgage calculator online and check the difference between 15 years and 25. You may be surprised?

Not saying don't do it, just do your research. :-)

As for the pikey existence I saw the thread but forgot to comment. I spent 3.5 years living in 2 1970's caravans and it's not for most. We had no water for 2 months at one point because of the bad winter. Things left out overnight frozen solid and the stuff in the fridge still liquid as it was warmer lol. In the summer the polar opposite! Damp's a problem too. We only had electric oil radiators. That was in between the ages of 9 and 12. I thought it was normal but I'd probably have ended up in care now lol

[Niall]

I think you should go and have a word with the bank mate. Ive spent so many evenings of late researching exactly the same as you and keep getting conflicting answers.
Sort out a appointment with your (probable) chosen mortgage provider and ask them all of these questions. Dont forget, you're their customer and they want your business so they are more than happy to help you out with this stuff. Just remember to question everything you don't understand in detail

[Danny Wideboy]

http://s294.photobucket.com/user/mardler...k.jpg.html


I'll just leave that here for you, in case you change your mind...............

[THE_Liam]

I think you should go and have a word with the bank mate. Ive spent so many evenings of late researching exactly the same as you and keep getting conflicting answers.
Sort out a appointment with your (probable) chosen mortgage provider and ask them all of these questions. Dont forget, you're their customer and they want your business so they are more than happy to help you out with this stuff. Just remember to question everything you don't understand in detail

This, 100%. These people are there to help you, and they're the best people to ask.

[Dum-Dum]

Personally


- I'd speak to an independent mortgage adviser not an individual bank.

- I wouldn't buy a new build as half of them are given to affordable/social housing meaning that there is a good chance that some of your neighbors will be scum of some sort and I've seen some terrible ones where people have bought half million quid new builds to find out that their neighbours never work, have reversed sleeping patterns so are always up with their TV full blast at 4am and seem to have more police at their house than there ever is at the police station.

- When I looked at help to buy 2 years ago the government were lending you the extra 20% for 5 years and after that you had to pay it all back either by getting a loan, having saved up for it or by hoping that your wages and the house value have gone up so that you can then get a new mortgage for the full amount.

[cpikey316_]

- I wouldn't buy a new build as half of them are given to affordable/social housing meaning that there is a good chance that some of your neighbors will be scum of some sort and I've seen some terrible ones where people have bought half million quid new builds to find out that their neighbours never work, have reversed sleeping patterns so are always up with their TV full blast at 4am and seem to have more police at their house than there ever is at the police station.

This! I bought on one and tbh, its the kind of place Jeremy Kyle visits with a net. I cant wait to move.

Also, re the 3 bed, looks like a townhouse. My mate had one, but found it a bit impractical with a small child (due to the stairs) As the actual floor space is smaller, you just get more of it as there are 3 levels not 2. Just something to think about if you have little ones or plan to in the next few years!

[silverzx]

Thank you all, I'll be seeking advice from an independant mortgage/financial advisor in due course.

Also waving against a new build providing I can get a big enough deposit for a "used" home. The particular site I'm looking at is a 12 year development. I'd be long gone before it even finished probably! Then I'd have to compete with the "New" new builds in price..

A friend of mine bought a 3 bed semi for £125k the other day, it needs about 20k spending on it to get it tip top but it's bigger, cheaper, more bedrooms etc.

Also, being realistic, if interest rates did rise to 5, 6, 7% then I'd not really be able to afford repayments on a 190k house vs a 150k house.

[Paul Baldwin]

Dum-Dum raises a very good point about new builds. I live in a small town/village that has been altered dramatically by the local council with the people they have dumped on us from around and about with their social housing. Barrats Orchard was known as Benefits Orchard before they even finished building it lol

Speak to an independent adviser by all means but be aware they just want that tidy commission they get when they get you to sign up.

Themoneysavingexpert forum is a good place for info. Just skim reading similar situations people have could prove very useful.

As for interest rates. See what fix you can get for the longest term at the lowest interest rate you can find and afford? Rates are some of the lowest they have ever been so as far as I can see it they can only really go up or possibly drop again by a very small margin. Then you just need a backup plan when it comes to the end of the term in case the rates have changed massively for the worse when it comes to renew.

http://www.telegraph.co.uk/finance/perso...eaper.html

All depends on how much deposit you are have and how much you want to borrow but they reckon the one above is the cheapest 10 year fix ever.

[Poodle]

Help to buy? Sod that, way too risky imo, ironic considering the govt has spent the last ten years preaching about fiscal responsibility. It'll work fine if you and your partner are earning over 40k for the next five years and in good saving habits, and your house value rises, and the mortgage rates stay low, and the market doesn't crash leaving you unable to remortgage when the govt calls in it's 20%, etc, etc, etc...

Pikey life ftw...

[silverzx]

This is interesting...

Help to Buy terms and conditions
Help to Buy (England)
The Help to Buy scheme has specific terms and conditions and is subject to affordability criteria as defined by the Homes and Communities Agency. Help to Buy equity scheme is available on all plots in England, with a full purchase price up to £600,000, subject to status, terms and conditions apply. Help to Buy eligible applicants will be offered an equity loan of up to a maximum of 20% of the purchase price (based on the open market value). The registered provider will hold the second charge on the property. Applicants are required to fund at least 80% of the purchase price by means of a conventional mortgage, savings and any deposit where required. Applicants must obtain their conventional mortgage from a qualified lending institution (e.g. a bank or building society). For the first five years there is no fee charged on the equity loan component. At the start of year six a fee is collected of 1.75% of the market value of the property at the time the loan is entered into multiplied by the outstanding percentage under the equity loan, the annual fee of 1.75% will be uplifted by RPI +1% p.a.

[Paul_13]

Too many ins and outs with these things. I was thinking of doing it then read up on it