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streamingfreedom

The Insanity Of Htb

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So this my already be common knowledge here however most people I have spoken to at work have no idea this...

I was under the belief that the help to buy equity loan scheme was limited to putting down a 5% deposit. However after speaking to some sales offices at new build sites I have confirmed that in fact one can put down up to 55% and STILL take the 20% chunk of taxpayer money towards their property, needing only a mortgage for 25% of the property value..!!!

One sales office I spoke to said that not many people put down 5% and most were putting in significantly bigger deposits when using the scheme. This is in the South East and Oxfordshire. In some case's people are putting in 150k or more.

So we have taxpayer money being used to help people who already have plenty, to help them buy an even bigger place and mortgage at an even better LTV... is this not in some way illegal?!?

Those stats again:

5% is the minimum deposit, on top of the equity loan. So the maximum mortgage would be 75%.

As long as your mortgage is at least 25% of the purchase price, you can put down upto 55% as your own deposit;-

25% mortgage

20% equity loan

55% deposit

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just did a quick search for new builds in the area i like. And basically they look to have all been flogged off at silly prices.
Mixed feelings really.

- new builds are tiny and poor quality

- new builds are horrifically overpriced

- If you get the people who are recklessly buying with tiny deposits at least they driving new building

- as morons are buying new builds and are therefore in instant negative equity, they wont be buying anything i would actually want to buy for at least another 10-15 years so it traps them out of the market

- HTB reduces demand for better quality properties i would like (older built houses)

so yes HTB is a bit insane, any benefits you would of got with lower % mortgage repayments are more than matched by the increase in price. So you would have to be a mug to consider it.

The biggest issue i have is the effect on average prices over areas, for example old flats say cost 60-80k, then the new build flats are built, the average flat in the area is suddenly pushed up to 100k. which in turn drives some sentiment which also makes price falls sticky on property i would actually be interested in.

better to just cut out all 'help' and cut out the middle man build houses directly from the government.

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The other loophole is that if you already own a house (or several) outright with no remaining mortgage, then you qualify as a "first time buyer"

Hmm.. that was surprising to me but you are quite right - there is not FTB requirement at all:

Equity loans are available to first time buyers as well as homeowners looking to move. The home you want to buy must be newly built with a price tag of up to £600,000.

http://www.helptobuy.gov.uk/equity-loan/eligibility#sthash.EdMSCSN7.dpuf'>'>http://www.helptobuy.gov.uk/equity-loan/eligibility#sthash.EdMSCSN7.dpuf'>http://www.helptobuy.gov.uk/equity-loan/eligibility#sthash.EdMSCSN7.dpuf

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just did a quick search for new builds in the area i like. And basically they look to have all been flogged off at silly prices.

Mixed feelings really.

- new builds are tiny and poor quality

- new builds are horrifically overpriced

- If you get the people who are recklessly buying with tiny deposits at least they driving new building

- as morons are buying new builds and are therefore in instant negative equity, they wont be buying anything i would actually want to buy for at least another 10-15 years so it traps them out of the market

- HTB reduces demand for better quality properties i would like (older built houses)

so yes HTB is a bit insane, any benefits you would of got with lower % mortgage repayments are more than matched by the increase in price. So you would have to be a mug to consider it.

The biggest issue i have is the effect on average prices over areas, for example old flats say cost 60-80k, then the new build flats are built, the average flat in the area is suddenly pushed up to 100k. which in turn drives some sentiment which also makes price falls sticky on property i would actually be interested in.

better to just cut out all 'help' and cut out the middle man build houses directly from the government.

To be honest, we are at the point where if there was a decent new build available we'd consider doing it with HTB for as a big a chunk of it as possible. But of course there aren't any new builds worth buying which kind of scuppers that plan.

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To be honest, we are at the point where if there was a decent new build available we'd consider doing it with HTB for as a big a chunk of it as possible. But of course there aren't any new builds worth buying which kind of scuppers that plan.

Ford's "any car you want so long as it's black" re-worked for the fag-end of the UK bubble. You can have government help buying any house you want, so long as it's shit. :rolleyes:

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Ford's "any car you want so long as it's black" re-worked for the fag-end of the UK bubble. You can have government help buying any house you want, so long as it's shit. :rolleyes:

Yeah - fair to say that the temptation isn't strong.

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But this is better than people just putting their life savings of 5% down and being stuck with a load of debt.

At least richer pillocks putting more money down will leave plenty of equity for the banks if they fail to pay the mortgage or the loany bit after 5 years.

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Sorry, I can't see why they would do that when they could get a far better mortgage deal with the deposit they already have. The HTB interest rate is shite, around 5% iirc

Edited by maffo in oxford

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Sorry, I can't see why they would do that when they could get a far better mortgage deal with the deposit they already have. The HTB interest rate is shite, around 5% iirc

Whilst I completely agree with what you are saying, is the effective maximum you can borrow higher under htb? I.e. how much of what you borrow from the government is conveniently ignored when assessing affordability for the main mortgage.

That would explain it because never forget the Great British public's love in for 'stretching themselves' when it comes to borrowing a f**kload of money for 'property'

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regarding those sold prices of new builds.

friend of mine bought a new build recently.

trade in on her new house.

have a massive discount, like 30% as a gifted deposit, and a silly trade in price.

the figures though were set up that the full original asking price was Tisted as the sale price.

she agreed it was fraud and I urged her to go to the police. instead she bought the house and signed on the dotted line.

wasn't this common in 2007 and supposedly stopped?

shameful all round.

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Whilst I completely agree with what you are saying, is the effective maximum you can borrow higher under htb? I.e. how much of what you borrow from the government is conveniently ignored when assessing affordability for the main mortgage.

That would explain it because never forget the Great British public's love in for 'stretching themselves' when it comes to borrowing a f**kload of money for 'property'

Correct, this scheme doesn't include the loan part in the affordability, so you can effectively stretch that bit more (20% more!!).

I've been offered a mortgage on htb which is higher than I have been offered from other banks, and by that I mean just the 75% part.

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Sorry, I can't see why they would do that when they could get a far better mortgage deal with the deposit they already have. The HTB interest rate is shite, around 5% iirc

As above I think it is purely because the affordability of the loan is not considered so they can effectively borrow 20% more than they could without the scheme. Looking at it as a nice bit of free money to get a bigger house.

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To be honest, we are at the point where if there was a decent new build available we'd consider doing it with HTB for as a big a chunk of it as possible. But of course there aren't any new builds worth buying which kind of scuppers that plan.

I understand where you are coming from. As insane as the whole UK property market situation is, we are considering it. Mid thirties with a young child going into school age next year and we are desperate to get a decent roof over our heads.

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OK.... so I gather from this thread that HTB is available only for new builds? (deliberately to support the housebuilders?)

One problem as others have alluded to, correctly in my opinion, is that most new builds are sh*t quality.

So a thought occurs to me......is there anything in the 'small print' that prevents HTB from being available for self builds? Or is it limited to just 'off the shelf' mass produced, overpriced, identikit, characterless shoe boxes from the mass builders.

A self build is, technically, a new build and has the advantage that the buyer, being the builder, can ensure the quality and style is to their personal requirements.

Not sure how, if at all, this could work. Am just at the thinking out loud stage here.

Anyone want to chip in?

Edited by anonguest

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Sorry, I can't see why they would do that when they could get a far better mortgage deal with the deposit they already have. The HTB interest rate is shite, around 5% iirc

No it's 0% for 5 years....free money. Very rational for people to be taking it.

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OK.... so I gather from this thread that HTB is available only for new builds? (deliberately to support the housebuilders?)

One problem as others have alluded to, correctly in my opinion, is that most new builds are sh*t quality.

So a thought occurs to me......is there anything in the 'small print' that prevents HTB from being available for self builds? Or is it limited to just 'off the shelf' mass produced, overpriced, identikit, characterless shoe boxes from the mass builders.

A self build is, technically, a new build and has the advantage that the buyer, being the builder, can ensure the quality and style is to their personal requirements.

Not sure how, if at all, this could work. Am just at the thinking out loud stage here.

Anyone want to chip in?

I would be interested to find out too. Also, that help to build, would an independent qualify?

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I would be interested to find out too. Also, that help to build, would an independent qualify?

'Help to Build'? Was that sarcasm or is there genuinely such a scheme? I'm not aware of it. Then again with HM Govt constantly inventing schemes for all manner of things these days it's easy to lose track!

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'Help to Build'? Was that sarcasm or is there genuinely such a scheme? I'm not aware of it. Then again with HM Govt constantly inventing schemes for all manner of things these days it's easy to lose track!

Constantly inventing schemes indeed... I'm sure that when HTB equity loan was launched it was oly for those with 5% deposits only, not sure when they changed it to allow 55%!

I know HTB had had some criticism in the press but it's about time it hit the front page. It's a scheme masquerading as helping those that struggle to save deposit when it's being used by people who already have plenty. I think I might write to our MP about this.

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Constantly inventing schemes indeed... I'm sure that when HTB equity loan was launched it was oly for those with 5% deposits only, not sure when they changed it to allow 55%!

I know HTB had had some criticism in the press but it's about time it hit the front page. It's a scheme masquerading as helping those that struggle to save deposit when it's being used by people who already have plenty. I think I might write to our MP about this.

You only 'think you might write'?! Prey tell just how bad or lunatic do things need to get before you put pen to paper?

IF a lazy slob like me can then you can too. Just do it!

At the very least think of the good karma from doing so. ^_^

Edited by anonguest

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You only 'think you might write'?! Prey tell just how bad or lunatic do things need to get before you put pen to paper?

IF a lazy slob like me can then you can too. Just do it!

I wrote to my MP a few months back about the state of housing and rental costs in my old area. Pointless exercise. Same old BS party line in response that ignited all my main points. When I wrote again pointing out all the failings of their letter content, communication stopped.

I quit my job and we (me wife and two kids) moved 35 miles away to live in a 4 bed detached rental for half the price of a similar rental in the town in which I lived for the first 35 years of my life.

In the end, the personal decision to act is what counts.

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