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First time buyer. Need some advice


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I've been to look at a property today, it's a new build and will be ready in a few months.

 

Basically wanting some advice on this help to buy: equity loan scheme. I don't fully understand it.

 

Any advice will be greatly appreciated.

 

Thank you

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Is there anything specific you need to know as typing out a full explanation of the whole scheme would take me forever.

 

Hi just a few things really.

 

Is it worth it?

How does it compare to a traditional mortgage?

And as a first time buyer, would I be more beneficial getting this style of mortgage or the traditional?

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Personally I think it's a cracking deal, I would say go for it while it's still available. You can get your hands on mortgage rates only available to people with a 25% deposit yet you only need a 5% deposit. It's not straight forward, it's difficult to apply for and there are additional risks to a traditional mortgage but if I qualified for it I would be jumping on it.

 

I arranged one for a client of mine who moved from a 1920's two bed terraced to a 4 bed new build detached in a sort after area and was only paying £75 a month more on his mortgage.

 

Things to be aware of. You take an equity loan from the government of 20% & you have to apply for that separately from the housing association. Please remember it's an equity loan so you do not pay back the amount you borrowed you pay back the % you borrowed.

 

Example: You buy at £250k with a 20% equity loan (£50k) you put in 5% (£12500) and you get a mortgage for the remaining 75% (deals available under 2%). Then you sell in 5 years time for £300k. At the point of sale you have to pay the loan back at the same % as the purchase price not how much you borrowed initially. So you borrowed £50k (20% @ £250k) but you sell for £300k so you have to repay 20% @ £300k (£60k).

 

Other things to be aware of, most solicitors & mortgage brokers charge a premium for this kind of transaction as it is more complicated than a normal purchase. Don't forgot Stamp duty, on a £250k purchase you're looking at £2500.

 

Hope that helps.

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They idea of the help to buy is that you can't get a normal mortgage hence you need to use help to buy. Do you have a deposit saved up? If so use that to get a normal mortgage. With help to buy you can only use 1 of 3 companies opposed to have the whole market available to you which is better for getting a good deal. Also house builders can only offer certain incentives with help to buy so if you are not using it you may be be able to haggle with the house builder.

 

In regards to is it worth it only you can answer that. I recommend speaking to an independent mortgage advisor to see what your options are.

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They idea of the help to buy is that you can't get a normal mortgage hence you need to use help to buy. Do you have a deposit saved up? If so use that to get a normal mortgage. With help to buy you can only use 1 of 3 companies opposed to have the whole market available to you which is better for getting a good deal. Also house builders can only offer certain incentives with help to buy so if you are not using it you may be be able to haggle with the house builder.

 

In regards to is it worth it only you can answer that. I recommend speaking to an independent mortgage advisor to see what your options are.

 

It's 1 of 5 companies now Love2print. I would say if you're buying a second hand property then you're right you'd be better using a bigger deposit and accessing the whole of the market but if you're buying a new build you'd be better keeping your cash in your pocket and taking advantage of help to buy.

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I take it that means there are no checks on much cash up have then?

 

That's correct, you could have £100k sat in an account and still do the help to buy. As long as it's the only property you own. It's available to home movers & FTB's but not open to investors or people not planning on selling their current home.

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I thought the idea was to help people who couldn't save up more than a 5% deposit. Or at least that how it's been portrayed. Seems not then.

 

That's how it was marketed but really it's used to try and boost the housing market & help shift a load of new build properties to help encourage builders to build more & boost the second hand market by people moving up the chain.

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