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Reck B

Can't Afford Both The Deposit And The Whole House?

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http://www.rightmove.co.uk/new-homes-for-sale/property-40274650.html?premiumA=true

With Help to Buy you need a minimum deposit of 5%. The government will lend you between 10% and 20% of the value of the property through an equity loan, meaning you will only need to secure up to a 75% mortgage. Full price is £309950. HELP TO BUY PRICE BASED ON 80% / 20% SHARED EQUITY SCHEME. Please ask for further details.

Call me moronic, but if you can't put down a 'normal' deposit and to buy 100% of the house there's a couple of things you ought consider;

1) You can't afford the house

2) You can't afford the house.

Edited by Reck B

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http://www.rightmove.co.uk/new-homes-for-sale/property-40274650.html?premiumA=true

Call me moronic, but if you can't put down a 'normal' deposit and to buy 100% of the house there's a couple of things you ought consider;

1) You can't afford the house

2) You can't afford the house.

Its a ponzi scheme don't you know! In a 100 years everyone will be happy to buy 1% and rent the other 99%! At least they will have a foot (well, maybe a toe nail) on the ladder!

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I'd have said overpriced at £247,960 not £309950

Country is blooming mad

It's a house of bricks from outside. Not only the price, and the help-to-debt to afford it. The exterior appearance. House after house.

It must be a sign of the times. What people will accept. The debt and the designs. Too many of newbuild developments the opposite of how the Edwardians went about it, with gentler and more decorative rural way of life design to their houses. Charming arts and craft movement themes. Sophisticated but elaborate trim even on many terraces, and making each house or pair of semis different in some appealing way.

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http://www.rightmove.co.uk/new-homes-for-sale/property-40274650.html?premiumA=true

Call me moronic, but if you can't put down a 'normal' deposit and to buy 100% of the house there's a couple of things you ought consider;

1) You can't afford the house

2) You can't afford the house.

I have a workmate I work closely with who is just about to exchange on a newbuild 4 bed in Bedfordshire on this scheme. He was the classic case of financially unaware, believed the market hype and got his young family trapped. 12 months ago he was depressed at being stuck in a Hertfordshire 2 bed terraced bought in 2007 after a trade up from a 1 bed flat. Total stereotypicial nightmare. Paid £185k for the house with a £15k loan on top on the Northern rock 120% mortgage, so owed £200k on the house less transferred equity from the flat bought a few years earlier. Interest rate was fixed @ 6% for 5 years!! (2007 to 2012)

£15k loan was for must have house decorations, sofas, plasma TV etc. Then shortly afterwards wife got pregnant with first child. but rather than save they took a payment holiday on the mortgage with NR and then took a £10k carloan to buy a nice newish diesel family car!!!

18 months later with a small baby realised they couldn't afford the car loan payments and run the car with insurance and tax, servicing etc. Then if developed a costly look warning light fault so they sold it for a huge discount to webuyanycar.com and took over an old golf from the parents for free. But still had the car loan as they used the car sale money to pay off 2-3 years of credit card spending.

Then child no 2 arrives planned but kinda regretted. Suddenly its 2012 and they have a boy and girl 4 years apart sharing a bedroom in a house worth less than the mortgage and 120% loan, with a big car loan still to pay and CC debts too!

In laws offer a £30k BOMAD free loan to get a deposit on a family house but they can't except because this just clears the N/E and debts and would only leave them a 5% deposit on 4 bed which means no lender with give them a mortgage.

Inlaws cant understand (sitting in a paid off 3 bed S/E home) why they can't buy. Came Jan/Feb 2013 this guy is seriously down and feels they will be trapped "forever" in a 2 bed with teenagers sharing a room.

So a another workmate and I who are good with money, no debts etc spend several weeks shooting the breeze with this bloke pointing out that max Sky TV package, new £1.5k bought mountain bike, takeaways every weekend and football season tickets are not lifes "essentials". this is the guy who also has the £15 a month lost credit card insurance policy taken out 5 years ago an forgotten about!

Anyway, he's sees sense, and from Feb to April cancels all the family's excesses and suddenly has hundreds extra every month to pay down debt and make a plan to get some kind of bigger deposit over the next 2-3 years. He was very determined to copy his sensible peers.

Then April budget came and being a HPCer I talked him through help to buy and what a dumb idea it was, but how if I was him I would take it quick to get into a family home before the cash runs out.

He drags his heals until June trying to find somewhere family sized but local (expensive, London train commute distance). Then suddenly after we suggested Bedfordshire was driveable to work they found a newbuild 4 bed for £250k, sold the herts 2 bed for £189k, took the 20% newbuy loan and the £30k bomad loan and hey presto they should be in and stretched (but happy) by Xmas.

And this is why my 2009 Taylor Wimpey shares bought for 12p have made a fantastic return in 2013!!!

Did you know about newbuy that ;

A) You cant pay the government back just what you borrowed in £££, whenever you like. You have to pay them back in a %, in minimum 10% lumps. So this is a true shared equity deal, they own 20% of your house, not just loan you 20% of the purchase price.

So if this guys house doubles in value of the next 20 years, his £50k borrowed from the government will cost him £100k to pay back!!

B) Newbuy has strict conditions. It is actually a government agency that wont allow you to make any structural improvements to the house (New windows, extention, conservatory, new kitchen etc ) without their approval! The reason being the Newbuy regulations state you should be putting any cash available for major home improvements into repaying you equity loan asap rather than south facing conservatory with wicker furniture!

All true, I have read the documents this guy has had to sign.

M

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Markyh, amazing story. Some here would say you were too kind to this guy to help him out. So effectively the government are, instead of building new council houses, buying shares in the existing housing stock. I wonder how these figures put in through HTB compare with the value of council houses built to date which are still owned?

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Markyh, amazing story. Some here would say you were too kind to this guy to help him out. So effectively the government are, instead of building new council houses, buying shares in the existing housing stock. I wonder how these figures put in through HTB compare with the value of council houses built to date which are still owned?

I have no doubt they will overspend and be up to their eyeballs in debt within a few years, but at least they will be trapped in s family sized home until their 3.2% 5 year help2buy fix ends!

Then if IR are 5% god Help them! All you can do is lead a horse to water, you cant make them drink!

M

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Only 3 toilets - how old fashioned. No wonder they can't shift 'em.

I wouldn't want to get bogged down cleaning those more than I need to.

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Only 3 toilets - how old fashioned. No wonder they can't shift 'em.

...maybe because once you have committed yourself to buying it you may require to go to the toilet rather more often than you have been used to......? ;)

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Call me moronic, but if you can't put down a 'normal' deposit and to buy 100% of the house there's a couple of things you ought consider;

1) You can't afford the house

2) You can't afford the house.

ThoughtCrime! ThoughtCrime!

You are hereby sentenced to be held in solitary confinement with nothing to do except read the provided 10 year's back copies of the Daily Express.You will only be released when you clearly consider spending 80% of your take home pay on the interest on a mortgage for 25% of a bedsit to be a sensible financial decision.

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Only 3 toilets - how old fashioned. No wonder they can't shift 'em.

We bought a new build in 2000 (3 bed semi for £104k..) - that had 3 toilets as well. There seems to be some sort of rule now - you have to have a toilet downstairs, a main bathroom AND an ensuite.

TBH that house dosen't look too bad (haven't seen the garden though), just at least twice the price it should be.

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I have a workmate I work closely with who is just about to exchange on a newbuild 4 bed in Bedfordshire on this scheme. He was the classic case of financially unaware, believed the market hype and got his young family trapped. 12 months ago he was depressed at being stuck in a Hertfordshire 2 bed terraced bought in 2007 after a trade up from a 1 bed flat. Total stereotypicial nightmare. Paid £185k for the house with a £15k loan on top on the Northern rock 120% mortgage, so owed £200k on the house less transferred equity from the flat bought a few years earlier. Interest rate was fixed @ 6% for 5 years!! (2007 to 2012)

£15k loan was for must have house decorations, sofas, plasma TV etc. Then shortly afterwards wife got pregnant with first child. but rather than save they took a payment holiday on the mortgage with NR and then took a £10k carloan to buy a nice newish diesel family car!!!

18 months later with a small baby realised they couldn't afford the car loan payments and run the car with insurance and tax, servicing etc. Then if developed a costly look warning light fault so they sold it for a huge discount to webuyanycar.com and took over an old golf from the parents for free. But still had the car loan as they used the car sale money to pay off 2-3 years of credit card spending.

Then child no 2 arrives planned but kinda regretted. Suddenly its 2012 and they have a boy and girl 4 years apart sharing a bedroom in a house worth less than the mortgage and 120% loan, with a big car loan still to pay and CC debts too!

In laws offer a £30k BOMAD free loan to get a deposit on a family house but they can't except because this just clears the N/E and debts and would only leave them a 5% deposit on 4 bed which means no lender with give them a mortgage.

Inlaws cant understand (sitting in a paid off 3 bed S/E home) why they can't buy. Came Jan/Feb 2013 this guy is seriously down and feels they will be trapped "forever" in a 2 bed with teenagers sharing a room.

So a another workmate and I who are good with money, no debts etc spend several weeks shooting the breeze with this bloke pointing out that max Sky TV package, new £1.5k bought mountain bike, takeaways every weekend and football season tickets are not lifes "essentials". this is the guy who also has the £15 a month lost credit card insurance policy taken out 5 years ago an forgotten about!

Anyway, he's sees sense, and from Feb to April cancels all the family's excesses and suddenly has hundreds extra every month to pay down debt and make a plan to get some kind of bigger deposit over the next 2-3 years. He was very determined to copy his sensible peers.

Then April budget came and being a HPCer I talked him through help to buy and what a dumb idea it was, but how if I was him I would take it quick to get into a family home before the cash runs out.

He drags his heals until June trying to find somewhere family sized but local (expensive, London train commute distance). Then suddenly after we suggested Bedfordshire was driveable to work they found a newbuild 4 bed for £250k, sold the herts 2 bed for £189k, took the 20% newbuy loan and the £30k bomad loan and hey presto they should be in and stretched (but happy) by Xmas.

And this is why my 2009 Taylor Wimpey shares bought for 12p have made a fantastic return in 2013!!!

Did you know about newbuy that ;

A) You cant pay the government back just what you borrowed in £££, whenever you like. You have to pay them back in a %, in minimum 10% lumps. So this is a true shared equity deal, they own 20% of your house, not just loan you 20% of the purchase price.

So if this guys house doubles in value of the next 20 years, his £50k borrowed from the government will cost him £100k to pay back!!

B) Newbuy has strict conditions. It is actually a government agency that wont allow you to make any structural improvements to the house (New windows, extention, conservatory, new kitchen etc ) without their approval! The reason being the Newbuy regulations state you should be putting any cash available for major home improvements into repaying you equity loan asap rather than south facing conservatory with wicker furniture!

All true, I have read the documents this guy has had to sign.

M

Hello M, I was wondering if your workmate might be interested in participating in a discussion group with other new build owners in London on Thursday (22 August)?

We are an independent market research company who specialise in organising focus groups.

We are currently looking for people who have bought a new build home in London in the past five years.

The market research group will take place in South London the evening of Thursday 22 August and you will be paid a cash amount at the end of the group for your participation.

If you would be interested in attending or know anyone else who might fit the bill please contact me on 0203 582 0999.

Many thanks,

Kate

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I have a workmate I work closely with who is just about to exchange on a newbuild 4 bed in Bedfordshire on this scheme. He was the classic case of financially unaware, believed the market hype and got his young family trapped. 12 months ago he was depressed at being stuck in a Hertfordshire 2 bed terraced bought in 2007 after a trade up from a 1 bed flat. Total stereotypicial nightmare. Paid £185k for the house with a £15k loan on top on the Northern rock 120% mortgage, so owed £200k on the house less transferred equity from the flat bought a few years earlier. Interest rate was fixed @ 6% for 5 years!! (2007 to 2012)

£15k loan was for must have house decorations, sofas, plasma TV etc. Then shortly afterwards wife got pregnant with first child. but rather than save they took a payment holiday on the mortgage with NR and then took a £10k carloan to buy a nice newish diesel family car!!!

18 months later with a small baby realised they couldn't afford the car loan payments and run the car with insurance and tax, servicing etc. Then if developed a costly look warning light fault so they sold it for a huge discount to webuyanycar.com and took over an old golf from the parents for free. But still had the car loan as they used the car sale money to pay off 2-3 years of credit card spending.

Then child no 2 arrives planned but kinda regretted. Suddenly its 2012 and they have a boy and girl 4 years apart sharing a bedroom in a house worth less than the mortgage and 120% loan, with a big car loan still to pay and CC debts too!

In laws offer a £30k BOMAD free loan to get a deposit on a family house but they can't except because this just clears the N/E and debts and would only leave them a 5% deposit on 4 bed which means no lender with give them a mortgage.

Inlaws cant understand (sitting in a paid off 3 bed S/E home) why they can't buy. Came Jan/Feb 2013 this guy is seriously down and feels they will be trapped "forever" in a 2 bed with teenagers sharing a room.

So a another workmate and I who are good with money, no debts etc spend several weeks shooting the breeze with this bloke pointing out that max Sky TV package, new £1.5k bought mountain bike, takeaways every weekend and football season tickets are not lifes "essentials". this is the guy who also has the £15 a month lost credit card insurance policy taken out 5 years ago an forgotten about!

Anyway, he's sees sense, and from Feb to April cancels all the family's excesses and suddenly has hundreds extra every month to pay down debt and make a plan to get some kind of bigger deposit over the next 2-3 years. He was very determined to copy his sensible peers.

Then April budget came and being a HPCer I talked him through help to buy and what a dumb idea it was, but how if I was him I would take it quick to get into a family home before the cash runs out.

He drags his heals until June trying to find somewhere family sized but local (expensive, London train commute distance). Then suddenly after we suggested Bedfordshire was driveable to work they found a newbuild 4 bed for £250k, sold the herts 2 bed for £189k, took the 20% newbuy loan and the £30k bomad loan and hey presto they should be in and stretched (but happy) by Xmas.

And this is why my 2009 Taylor Wimpey shares bought for 12p have made a fantastic return in 2013!!!

Did you know about newbuy that ;

A) You cant pay the government back just what you borrowed in £££, whenever you like. You have to pay them back in a %, in minimum 10% lumps. So this is a true shared equity deal, they own 20% of your house, not just loan you 20% of the purchase price.

So if this guys house doubles in value of the next 20 years, his £50k borrowed from the government will cost him £100k to pay back!!

B) Newbuy has strict conditions. It is actually a government agency that wont allow you to make any structural improvements to the house (New windows, extention, conservatory, new kitchen etc ) without their approval! The reason being the Newbuy regulations state you should be putting any cash available for major home improvements into repaying you equity loan asap rather than south facing conservatory with wicker furniture!

All true, I have read the documents this guy has had to sign.

M

This reads like you ultimately screwed him for your own gain.

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Sample Help to Buy terms and conditions.

Terms and conditions

Help to Buy

1.1 This offer is only available on selected new build plots and developments in England only. The maximum property value for Help to Buy is £600,000.

1.2 Help to buy is only available on capital mortgages and on properties which are occupied by the individual or individuals taking out the mortgage.

1.3 Purchasers will be required to raise funding (including a mortgage and a deposit) of not less than 80% of the property purchase price (excluding any mortgage fees). The property will be subject to a first charge in favour of the mortgage company. Purchaser deposit must be a minimum of 5% after the equity loan has been applied. Mortgage lender's criteria may affect any deposit percentage and whether it applies before or after the equity loan is deducted from the purchase price.

1.4 The HCA will provide an equity loan to eligible purchasers of not less than 10% and not more than 20% of the purchase price subject to the terms of the equity loan agreement. Based on the maximum purchase price of £600,000, the HCA will therefore provide an equity loan of up to £120,000.1.5 The equity loan provided by the HCA will be secured by a second charge on the property behind the first charge referred to in paragraph 1.3.

1.6 The equity loan provided by the HCA will be interest free for the first 5 years. From the beginning of year 6, interest will be payable by the purchaser at an annual gross rate of 1.75%, rising at the Retail Prices Index published by the Office for National Statistics plus 1% per year thereafter.

1.7 The equity loan must be repaid within 25 years of legal completion of the purchase of the property whether the property is sold or not.

1.8 The equity loans will be repayable on the basis of the greater of the price of the property or its market value at the time of future sale or mortgage repayment as opposed to the original purchase price but disregarding additions or improvements made to the property by the purchaser with the consent of the HCA. This means that if the property increases or decreases in value, the purchaser will pay the HCA the same percentage of the new price of the property as the percentage the equity loan was of the original price. This may result in the HCA being paid more or less than the original loan value.

1.9 If, on the sale of the property, the price of the property has fallen and there is insufficient money from the sale to repay the equity loans after the mortgage has been paid the purchaser will lose any deposit paid. The HCA will not however seek to recover the balance of their equity, not otherwise paid out of the proceeds of sale, from the purchaser.

1.10 The purchaser may repay the equity loan to the HCA at any time following legal completion. Repayment whether in full or by instalments will be based on the market value of the property at the time of the repayment(s) and the purchaser will have to arrange and pay for the valuation of the property at that time. The minimum instalment value is 10% of the total of the equity loans.

1.11 Detailed terms and conditions apply to the equity loan which will be made available to the purchaser via their legal advisors as part of the conveyancing process.

An example of how Help to Buy works is as follows:Purchase price £120,000 Mortgage £90,000 (75%)Deposit £6,000 (5% after loan applied i.e. 5% of purchase price) Equity loan £24,000 (20%) provided by HCA

For the first five years the equity loan is interest free. After 5 years an annual fee of 1.75% of the outstanding balance of the Equity loan is charged. This will be increased annually by RPI +1%.Sale after 5 years Open market value £150,000 (a 25% uplift in value). Mortgage repayment (assuming no repayment of capital) £90,000.Equity loan 20% of the open market value = £30,000 Remainder available to purchaser £28,800.

***** General Terms & Conditions

Any promoted ****** offer is subject to contract and status. Offers are on selected plots only and are subject to availability. The offers advertised cannot be used in conjunction with any other offer on the same plot unless expressly stated otherwise. Prices and details are correct at time of going to press. All images are typical of ******* and are for illustrative purposes only. Please contact the development in which you are interested for further details.

****** reserve the right to withdraw or alter any of these offers at any time prior to the payment of a reservation fee. Contracts must be exchanged within 28 days of reservation of your property. Failure to do so may result in the loss of all or part of your reservation fee.

The current specific offers being advertised in relation to selected **** developments are also subject to the specific terms and conditions set out above (N.B. these offers may vary from time to time and you should refer to the development in which you are interested to discover which offers are available on specific plots and developments).

******* will not be liable for the refusal of a mortgage based on the borrower’s individual circumstances which leads to the loss of any reservation fee. ****** will not be responsible for the failure of any deal due to any defects in your existing property which arise as a result of an inspection or survey, whether a part exchange deal has been agreed or not.

These terms and conditions do not affect your statutory rights.

Edited by billybong

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