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Confused By Brown's Ftb Scheme


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Now, before you all shout it down as a FTB I have to at least consider what this scheme offers.

I've done some sums based on the 3% interest loan on 25% stake for the government and here's what I worked out.

If I and partner were to buy a £250k place and own 75% of it and the gov owns 25%, and we put down our 40k deposit into our bit then the difference per month would be £325.

100% ownership £210k mortgage = £1400 per month repayments

75% ownership £147.5k mortgage + renting the 25% loan = £1075 per month.

That represents quite a difference, in terms of affordability.

My concerns are that the 3% I am paying on the 25% loan is interest only whereas if I was paying 5% on a repayment although it is almost twice as much at least it is a repayment scheme.

I do wonder though...whether saving £400 a month would make more sense as I could use that to overpay the main mortage and perhaps cut it down quicker.

Also, anyone know about how simple it would be to buy back the 25% the gov owns and what kind of adjustments to the original loan they are going to make?

If there are no adjustments then I would be very tempted by this.

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This scheme is just a con. They are trying to get you to fund the building of council houses marketed as new builds. It will be like renting without the option of being able to walk away. These houses will look nice when they are first built but stick a satellite dish on the wall and a nova on the drive and hey prseto ... a right chav shlthole.

Correct me if I am wrong but this deal is only available to newbuilds. If any thing this will enhance HPC as FTBs will wait for the newbuilds and not buy any existing stock hence even less FTBs in the main market.

HPC Bring it on

Just cxchanged on my gaff and sitting on my bag of cash for 2 years in spain.. see you all in repoland.

Ian B)

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Thanks! Anything more expansive to add?

My first reaction is one of suspicion, I am just trying to talk through the economics so that I can justify my suspicion.

HPI to this magnitude is morally WRONG why should you share your house with a bank and the government? This is a truely desperate desperate measure.

Why should you be mugged in to supporting this market even further then it has been already, stay well clear!

Foolish FTB's will flock to this deal and all it will do is prolong the correction further, in the medium term prices are still going to collapse, because this countries economy is still going to collapse.

Ask yourself what you will do if you have to or you are forced to sell, once the bank and financial insititution has been paid out, it's unlikely you will have enough money to make the next rung, with the added "bonus" that you won't be an FTB anymore so hence you'll not qualify for any more help.

Stuck where you are because you can't sell or Downsizing. What a choice!!! :rolleyes:

Don't touch it.

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Thanks! Anything more expansive to add?

My first reaction is one of suspicion, I am just trying to talk through the economics so that I can justify my suspicion.

One thing they have said is it won't be means tested therefore if you have savings all the better. It's also a scheme which involves the lenders so I'm sure with a decent deposit it gives you a head start.

I think economically it might make sense it just depends on how the 25% goverment owned bit works.

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One thing they have said is it won't be means tested therefore if you have savings all the better. It's also a scheme which involves the lenders so I'm sure with a decent deposit it gives you a head start.

I think economically it might make sense it just depends on how the 25% goverment owned bit works.

Hmmmmm. Mixed views here. I'm not the only one confused then! :lol:

I like the sums and the non-means tested bit.

I don't like the 'new build only' scheme. If it is only applicable to new housing then I'm not interested.

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i got the impression that it was meant to get existing aspiring FTBs get onto the ladder?? not wait for a few years for houses to be built. if that is the case then house prioces may have crashed in this time so the scheme will be for the people who are really on their a*se therefore turning these new builds into council estate type areas that no-one can move away from because of tight contractual reasons.

it is interesting to note that their plans have existed for years in shared ownership schemes.

some good points made here http://www.politics.co.uk/issueoftheday/fi...036;8569447.htm

interesting that firstrungnow says that there are loads of pitfalls.

Hmmmmm. Mixed views here. I'm not the only one confused then!  :lol:

I like the sums and the non-means tested bit.

I don't like the 'new build only' scheme. If it is only applicable to new housing then I'm not interested.

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Hi Donnie,

I think it is entirely rational to consider it rather than instantly dismiss it (when the facts change, I change my mind and all that).

It is hard to say too much while the details are still so patchy.

What I would say is that you should not forget the interest you ARE getting on your £40k deposit (in calculating the difference in your position before and after).

Also, I think it really depends how much of a bear you are. To me, the opportunity to buy 75% of my property and then rent the other 25% at 3% with an option to buy later doesn't sound that attractive.

I'm pretty confident my property is 50% overvalued so I don't want 75% of this overvalued property much more than I want 100% of it (although the subsidised rent on the other 25% sweetens the pill a little).

As with many such initiatives, I think it will have a positive effect on the market but only at the margins (so if you were a little uncomfortable with the current situation you might feel you've been given enough of a cushion to tip the scales in favour of buying).

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If it is only for new-builds then does that mean that it won't help any chains at all. And chains that currently involve a FTB will not be helped but hindered as FTB's will be encouraged under this scheme to buy a new house!

Surely this will cause demand for New Houses to increase and thus reduce demand for older houses. Causing chains to freeze even more.

Edited by since the beginning
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If it is only for new-builds then does that mean that it won't help any chains at all. And chains that currently involve a FTB will not be helped but hindered as FTB's will be encouraged under this scheme to buy a new house!

Surely this will cause demand for New Houses to increase and thus reduce demand for older houses. Causing chains to freeze even more.

Following that logic, isn't this a disaster for existing BTLers?

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Guest Charlie The Tramp

Great scheme innit.

Only six in every hundred FTBs will be given the opportunity.

Result six in every hundred sellers happy bunnies.

Ninety four FTBs not given the opportunity.

Result ninety four sellers not happy bunnies. :D

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On a different PC today.

It's not a new scheme, it's called shared ownership and has been avaliable to key workers for years now.

Into your cost DD you have to account for the rent you'll have to pay on the 25% that the government/bank owns.

Raven

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does anyone know the in's and out's of shared ownership schemes?? will this announcement make people think its a good thing or a bad one?

Hi Donnie,

I think it is entirely rational to consider it rather than instantly dismiss it (when the facts change, I change my mind and all that).

It is hard to say too much while the details are still so patchy.

What I would say is that you should not forget the interest you ARE getting on your £40k deposit (in calculating the difference in your position before and after).

Also, I think it really depends how much of a bear you are. To me, the opportunity to buy 75% of my property and then rent the other 25% at 3% with an option to buy later doesn't sound that attractive.

I'm pretty confident my property is 50% overvalued so I don't want 75% of this overvalued property much more than I want 100% of it (although the subsidised rent on the other 25% sweetens the pill a little).

As with many such initiatives, I think it will have a positive effect on the market but only at the margins (so if you were a little uncomfortable with the current situation you might feel you've been given enough of a cushion to tip the scales in favour of buying).

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Guest Riser

Over the past couple of monts there have been several threads that generally agree that the greatest excesses of the current property bubble are to be found in new builds. They are inviting you to buy at the peak, resist and watch as prices fall in the comming months.

You should also consider that it is the virgin quality of new builds that many find attractive, once you put your own stamp on a place it may be devalued in the eyes of other potential buyers. There are also risks associated with buying off plan and remember you are often dealing with professional sellers rather than owners or EA's, they will be out to extract everything they can from you.

Finally many new builds particularly appartments are developed to feed a fashion, once fashion changes you could be left with 70's platfrom shoes and a paisley pattern shirt, if you still have a shirt that is B)

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you're right!!! i have used www.firstrungnow.com which helped me alot when informing me of shared and joint ownership. the gov havent pushed it before because they just want to be seen as taking a giant leap!!

how do they work the rent out for the rest of the mortgage? it all sounds very complicated and if not many people can enter it... whats the point!? they need to pump some money int housing associations to push it in certain regions that it makes sence to. will afluant londoners want this?? it all sounds very council house type sit from 80s

On a different PC today.

It's not a new scheme, it's called shared ownership and has been avaliable to key workers for years now.

Into your cost DD you have to account for the rent you'll have to pay on the 25% that the government/bank owns.

Raven

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Don't forget that this scheme will leave people completely stuffed when they eventually want to sell and move up to the next 'rung' of the proverbial 'ladder'.

If you only own 50 or 75 per cent of your flat, how on earth are you going to afford the difference between what you actually own and the cost of a bigger place?

The problem at the moment is that the 'rungs' are already too far apart. I was lucky enough to buy a little flat in 1998, but the additional cost in moving to a larger place is currently prohibitive for me. If I had only bought 75 percent of my current flat, then of course the cost of moving up would be even more prohibitive.

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Don't forget that this scheme will leave people completely stuffed when they eventually want to sell and move up to the next 'rung' of the proverbial 'ladder'.

If you only own 50 or 75 per cent of your flat, how on earth are you going to afford the difference between what you actually own and the cost of a bigger place?

The problem at the moment is that the 'rungs' are already too far apart.  I was lucky enough to buy a little flat in 1998, but the additional cost in moving to a larger place is currently prohibitive for me.  If I had only bought 75 percent of my current flat, then of course the cost of moving up would be even more prohibitive.

Hmmmm. But think of the extra cash you might have SAVED whilst your repayments were that much less. This may give you enough equity to buy out the remaining 25%.

I'm wondering if the 25% remains static.

ie. you borrow 50k from the government and pay your 3% interest. Does that £50K stay £50k?

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