Author Topic: NewBuy Scheme (Read 19095 times)

Clock'd 0Ne · **Reply #15 on:** March 22, 2013, 22:47:05 PM

Re: NewBuy Scheme

Reply #15 on: March 22, 2013, 22:47:05 PM

A bit more information for you on the new Help to Buy scheme, which looks like it might be worthwhile if you're struggling to put together a decent sized deposit as they will be opening it up next year so it's not just for new builds:

http://www.moneysavingexpert.com/news/mortgages/2013/03/budget-2013-new-buy-mortgages

Quote

Q&A: Guarantees for small deposit mortgages (any property type)

What is this scheme? The Government will give a guarantee to lenders to provide mortgages where the loan to value ratio is high (ie, where there is a small deposit). The result is that if a borrower has their home repossessed, the Government will cover some of the losses. The plan is to support £130 billion of high loan to value mortgages via £12 billion of guarantees. The insurance is for the lender, so it does not mean borrowers' payments will be guaranteed.
What does it mean in practice? Those with small deposits often cannot get a home loan. So if it works, there will be more mortgages available to that group.
When does it start? January 2014.
Who will be eligible? Anyone with a deposit of less than 20%, on any type of home. Of course, you still need to meet lenders' criteria to get a mortgage, which is largely around your income and credit history.
Why would this scheme help lenders offer these mortgages? Lenders are reluctant to offer high loan to value mortgage because of the risk they will not recover money if the borrower misses payments, subsequently has their home repossessed, which is then sold for less than the amount the lender is owed from the mortgage. But if the Government can guarantee some of those losses, it is hoped it will facilitate more lending to this group.
How do I get one of these mortgages? Full information will be published later this year.

Adrock · **Reply #16 on:** March 24, 2013, 01:25:46 AM

Re: NewBuy Scheme

Reply #16 on: March 24, 2013, 01:25:46 AM

The beginning of another house price bubble and unrealistic lending? I think that government policy could be one of the most dangerous for the housing market. The stricter lending rules, which are making it difficult to lend, would be relaxed and house prices would begin to increase again, thats a worrying prospect.

On a personal note though I'm stuck on a SVR which is a killer, hopefully the new policy would have a knock on effect for me too. Would be nice to cut my interest payments down to something more manageable.

Clock'd 0Ne · **Reply #17 on:** March 24, 2013, 01:50:29 AM

Re: NewBuy Scheme

Reply #17 on: March 24, 2013, 01:50:29 AM

Actually whether the rules will be relaxed is up for debate, they may not loosen up who they lend to, but it may present more people with the possibility of getting on the ladder without a huge deposit saved - they'll still need to prove they have the ability to pay back the mortgage though - plus there is still only a finite amount of money available in the mortgage pot to go around. We will see how it affects the markets soon enough I guess.

Adrock · **Reply #18 on:** March 24, 2013, 10:52:20 AM

Re: NewBuy Scheme

Reply #18 on: March 24, 2013, 10:52:20 AM

Yeah I agree with that sentiment, but if the banks know for a fact there is a massive guarantor for a portion of the mortgage the lending rules will be relaxed because even if they do fail they'll still get most of their money back after repossessing the house.

I, for one, dont understand the preoccupation in this country with wanting to own your own house. In and around London its cheaper to pay a mortgage than rent in the majority of cases, so that would make sense. I'm not sure about the rest of the country, is that the case too? If it isn't there really is no need for people to own their homes.

Its a shame that the real problem is a lack of housing and there still aren't enough policies by any party to seriously combat that. I reckon stuff like HS2 could be cancelled and a nice chunk of that money ploughed into housing, tons of housing. Post WW2 style council house building, that'd fix a lot of the problems people are facing.

Clock'd 0Ne · **Reply #19 on:** March 24, 2013, 13:58:30 PM

Re: NewBuy Scheme

Reply #19 on: March 24, 2013, 13:58:30 PM

Spiralling house prices and greedy BTL schemers have pushed rental prices up too, it would be far cheaper for me in mortgage payments than for the same house than what I'm currently paying in rent. Plus you have something to show at the end of it instead of funding someone else's repayments.

Adrock · **Reply #20 on:** March 24, 2013, 16:09:32 PM

Re: NewBuy Scheme

Reply #20 on: March 24, 2013, 16:09:32 PM

Quote from: Clock'd 0Ne on March 24, 2013, 13:58:30 PM

Spiralling house prices and greedy BTL schemers have pushed rental prices up too, it would be far cheaper for me in mortgage payments than for the same house than what I'm currently paying in rent. Plus you have something to show at the end of it instead of funding someone else's repayments.

Rental prices are affected by housing shortages. Thats the bottom line, the BTL and spiralling house prices are all a symptom of a lack of housing. Landlords are profiting massively because of the housing benefit, which is being paid to private landlords because of a lack of social housing.

Social housing was not renewed or built when the councils sold off all of their houses in the 80's. So then the provision of social housing falls to housing associations when in reality the amount of houses required means we need central action from the very councils that sold off their housing stock many years ago.

The way to fix all of the problems would be, as I said earlier, to build massive amounts of housing.

The scheme announced by the government in isolation is in danger of creating a price bubble but coupled with an unprecedented building program it could solve a lot of problems. House owners like me might well suffer due to falling prices but in the long run that HAS to be the solution for the country as a whole.

Clock'd 0Ne · **Reply #21 on:** March 24, 2013, 17:35:14 PM

Re: NewBuy Scheme

Reply #21 on: March 24, 2013, 17:35:14 PM

I agree totally, but the side issue here is that they need to open up more green belt land as viable for development too. I don't know how they stop the home builders cutting corners and pricing the new build homes way over the odds though, they are so overpriced its leaving families in negative equity a year after getting the keys to the front door and its simply not on.

Sam · **Reply #22 on:** March 24, 2013, 18:26:15 PM

Re: NewBuy Scheme

Reply #22 on: March 24, 2013, 18:26:15 PM

Quote from: Adrock on March 24, 2013, 10:52:20 AM

I, for one, dont understand the preoccupation in this country with wanting to own your own house. In and around London its cheaper to pay a mortgage than rent in the majority of cases, so that would make sense. I'm not sure about the rest of the country, is that the case too? If it isn't there really is no need for people to own their homes.

Might be the other way around. I pay 1850 rent a month on a flat worth 500k. A mortgage on that would be about 2.2k a month if I put down 20%.

Dave · **Reply #23 on:** March 24, 2013, 22:38:42 PM

Re: NewBuy Scheme

Reply #23 on: March 24, 2013, 22:38:42 PM

Quote from: Sam on March 24, 2013, 18:26:15 PM

Quote from: Adrock on March 24, 2013, 10:52:20 AM
I, for one, dont understand the preoccupation in this country with wanting to own your own house. In and around London its cheaper to pay a mortgage than rent in the majority of cases, so that would make sense. I'm not sure about the rest of the country, is that the case too? If it isn't there really is no need for people to own their homes.

Might be the other way around. I pay 1850 rent a month on a flat worth 500k. A mortgage on that would be about 2.2k a month if I put down 20%.

nah - 1732 with 20% deposit - and you could get it down to £1,600 with a 30% deposit....(HSBC lifetime tracker) also consider that part of that is being spent on capital repayment - tis probably more reasonable to compare the rent with just the interest portion of the mortgage in terms of the actual 'cost' to you in the long term. Buying would be a preferable option if you're planning on staying somewhere for a decent length of time... (obv you've got stamp duty etc.. and legal fees too presenting extra up front costs)

Last Edit: March 24, 2013, 22:40:32 PM by Dave #187;

Sam · **Reply #24 on:** March 24, 2013, 22:46:35 PM

Re: NewBuy Scheme

Reply #24 on: March 24, 2013, 22:46:35 PM

Quote from: Dave on March 24, 2013, 22:38:42 PM

Quote from: Sam on March 24, 2013, 18:26:15 PM
Quote from: Adrock on March 24, 2013, 10:52:20 AM
I, for one, dont understand the preoccupation in this country with wanting to own your own house. In and around London its cheaper to pay a mortgage than rent in the majority of cases, so that would make sense. I'm not sure about the rest of the country, is that the case too? If it isn't there really is no need for people to own their homes.

Might be the other way around. I pay 1850 rent a month on a flat worth 500k. A mortgage on that would be about 2.2k a month if I put down 20%.

nah - 1732 with 20% deposit - and you could get it down to £1,600 with a 30% deposit....(HSBC lifetime tracker) also consider that part of that is being spent on capital repayment - tis probably more reasonable to compare the rent with just the interest portion of the mortgage in terms of the actual 'cost' to you in the long term. Buying would be a preferable option if you're planning on staying somewhere for a decent length of time... (obv you've got stamp duty etc.. and legal fees too presenting extra up front costs)

20% is 100k down and 30% is 150k. That's a big chunk of change for anyone so obviously it's easy to say, yeah put down 20% or 30% but its far easier said than done.

That said, this bbc tracker at 5% shows repayments at 2300 a month on 20%
http://www.bbc.co.uk/homes/property/mortgagecalculator.shtml

And once interest rates start to increase in the next few years, could be an expensive hobby buying a house !

Clock'd 0Ne · **Reply #25 on:** March 24, 2013, 23:17:36 PM

Re: NewBuy Scheme

Reply #25 on: March 24, 2013, 23:17:36 PM

That would be my biggest fear too, but my rent could easily be pushed up every year as well. Okay I can move out easier and get somewhere cheaper, but moving isn't cheap and who wants to be moving house every year to keep ahead of rent payments? I'm fortunate that I literally could work anywhere and move somewhere where its cheapest because all my work is on the web, but for most its not as easy I think.

Rivkid · **Reply #26 on:** March 25, 2013, 08:53:03 AM

Re: NewBuy Scheme

Reply #26 on: March 25, 2013, 08:53:03 AM

Yeah the interest rate rise is something we're having to factor in heavily - I'm basing all my calculations on a rate of 8/9% so we're quids in whilst its lower and can afford it when it goes up. Only way to be sure...

M3ta7h3ad · **Reply #27 on:** March 25, 2013, 09:15:20 AM

Re: NewBuy Scheme

Reply #27 on: March 25, 2013, 09:15:20 AM

Quote from: Rivkid on March 25, 2013, 08:53:03 AM

Only way to be sure...

Well that, or you could nuke it from orbit but that'll likely cost more

Sent from my Nexus 4 using Tapatalk 2

Clock'd 0Ne · **Reply #28 on:** March 25, 2013, 12:04:01 PM

Re: NewBuy Scheme

Reply #28 on: March 25, 2013, 12:04:01 PM

I wonder if household insurance policies cover a nuking from orbit

Adrock · **Reply #29 on:** March 25, 2013, 15:25:43 PM

Re: NewBuy Scheme

Reply #29 on: March 25, 2013, 15:25:43 PM

The best thing about this stalling economy is the low interest rates for home owners, well thats if you can get a good deal. I reckon a large rate increase could wipe out a massive chunk of home owners and would surely have a negative impact on house prices.

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Author Topic: NewBuy Scheme (Read 19095 times)