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I'm A First-Time Buyer. Should I Wait For The New Discounted Starter Homes?

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Thinking about buying your first home in the next couple of years and wondering if it’s worth waiting for the Government’s new discounted starter homes scheme?

The answer to this will depend on a number of factors but experts say your decision should centre around how long you plan to keep the property before moving on. if you live there for five years or more a starter home may be the best option, but if you plan to move sooner you may be better off with the Government's other newbuild scheme Help to Buy.

How much will I need to put down? Commentators expect borrowers will need a 5pc deposit.

How will this compare to other options available to first-time buyers who are struggling to get on the property ladder? The closest alternative is Help to Buy 1

“It’s about 2pc cheaper to borrow 75pc of the purchase price of a property than it is to borrow 95pc,” Mr Boulger said. “That means that over five years, someone who buys a starter home will pay around 10pc more in interest than someone who buys through Help to Buy.” This is where timing becomes crucial. The Government has said if you keep the starter house for at least five years, you can sell it at full market value, boosting your equity. This means that you are likely to recoup the extra money you paid out in interest. But bear in mind that you will have to start repaying the Government loan after five years, so your costs will go up if you decide to keep the home for longer.

Mr Boulger said the other benefit of Help to Buy is that you may be able to buy a bigger home in a nicer or more convenient area for the same monthly repayments you would pay for a starter home. The purchase price is likely to be higher, meaning you would need to find a bigger deposit to satisfy the 5pc minimum, but thanks to the Government loan and lower mortgage rates available you would pay the same in monthly repayments. “This is great way for first-time buyers to trade up and buy a slightly bigger house that they can grow into,” Mr Boulger said. “This will save the cost and hassle of moving to a bigger property in a few years’ time.”

https://uk.finance.yahoo.com/news/im-first-time-buyer-wait-110250706.html

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Only monthly costs count. Capital repayments, who cares! :P I love the way the article skirts over the 20% loan for HTB

'But bear in mind that you will have to start repaying the Government loan after five years, so your costs will go up if you decide to keep the home for longer.'

But if you sell your costs don't go up? You just have to pay 20% extra for your next home? Oh and your costs will never go up for any other reason! Interest rate raises, naa that's unpossible! :P

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Answer to original question : No. Boulger is a discredited VI tramp who would sell his granny to travelling circus if he thought she'd get him 10% commission.

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