Homebuy = Ripoff

Wizzkidy · 5 Aug 2010 at 14:55

What is the point of this homebuy scheme?

I currently live in a housing assciation flat with my wife, its way too small for us now. We both work full time her with the NHS and me in IT for a medium sized company.

We can't afford a deposit for a house (we have savings but no where near 20 - 30k)

You would think that the homebuy scheme would be their to help people like myself get onto the housing ladder.

We where given the option of taking up an offer on a 3 bedroom house new build - would be ideal really as my family is extending soon, but to bypass "most" of the deposit it seems they want to charge you an arm and a leg monthly!

I don't earn a huge wage and my wife earns even less then me but to pay out £1100 a month (750 morgage + 350 odd rent a month) just seems way over the top just to bypass most of the deposit (still need 5%) I thought this scheme is suppose to provide "affordable housing"

Well I can tell you that this won't be happening and we will just have to put up with living in a 1 bed flat for years on end. This just crys out suckage to me!

Even if I took up a 2 bed flat on this crap scheme its still going to cost me over 800 quid a month for a crappy 2 bed! its just not worth it.

Rent over, oh and Fox, stay out of my thread

Ukadder · 5 Aug 2010 at 15:00

Spooky!

Me and my GF are starting to look at houses and what we need. I'm in IT and shes in the NHS as well so I've got a feeling we will be in the same kind of boat!

Have you looked into Key worker homes at all? I've not, but it's on the list to investigate.

I'm sure a 2bed house would be somewhere in the middle of what you're looking for? it must be cheaper than the 3bed and better than the 2bed flat?

Out of interest, how much could you get a morgage for?

LiE · 5 Aug 2010 at 15:04

I never got on with housing association, it really annoyed me the whole scheme. First they would say based on your earnings you could afford x, but looking at affordability actually no you can't. So we apply for a cheaper house, they say, sorry you earn too much... complete fail.

We ended up on the First Time Buyer Initiative which meant we applied for a mortgage for as much as our wages would allow, and as long as it's over 50% of the value of the property, the government would lend us the rest. The government would then own a % of your house which you pay nothing towards for 3 years, at which time they start to charge you 1% a year on the amount. This figure increases each year after by 1% to a maximum of 3%. The fee doesn't reduce the government contribution.

It's a good way to get on the ladder, and as you become more finanically stable you can buy more of the house from the government in 10% blocks, or sell it and give the government their % back.

Glaucus · 5 Aug 2010 at 15:04

Where do you live to need a 20-30k deposit.

Homebuy is a pretty good scheme and not that expensive. Several mates have done it and I've looked into it. Just means you have to buy a new house, which sucks.

Unfortunately I missed the Homebuy open market scheme and the funding has not be continued

Wizzkidy · 5 Aug 2010 at 15:05

Key worker is a no go because she is only an admin staff within the NHS = not a key worker.

We could no doubt afford a 2 bed house but there none (and i mean none) around at the moment, and even then I bet its going to be very expensive

morgage wise this 3 bed was for 110,000 which I did get an AIP approved.

Its just poor because I would love to take this 3 bed house its nice and new but no way i'm paying that kind of money out.

LiE · 5 Aug 2010 at 15:09

It's stupid really, because if you take into account the rent you pay, if you paid that towards a bigger mortgage you could get a lot more. £1100 a month would probably get you something like £180k.

krooton · 5 Aug 2010 at 15:11

What scheme?

We bought using Homebuy Direct, whereby the government and HA each own 15% of the property, and we own the other 70% by way of 5% deposit and mortgage for the rest.

Shared ownership is way for people who otherwise wouldn't be able to start funnelling money in to their own property to do so. Mortgage + rent will be higher than just rent, but this is offset by you actually owning some of the property, allowing for a better deposit larger on when you trade up. Or you can staircase and buy a larger share as and when you can afford it.

Glaucus · 5 Aug 2010 at 15:12

LiE said:
It's stupid really, because if you take into account the rent you pay, if you paid that towards a bigger mortgage you could get a lot more. £1100 a month would probably get you something like £180k.

There's diffrent schemes, the rent ones are much worse than the 10 year loan ones.

what is the house value? a 3 bed house probably is in the 180k region. Well around here it is, even a 2 bed flat on the schemes around here are 130-150k

Sp00n · 5 Aug 2010 at 15:16

I was going to say for a 3 bed house it doesn't sound that bad to me.

I'm looking at 160k for a 2 bed terrace through homebuy, just nothing coming up in my area recently

Wizzkidy · 5 Aug 2010 at 15:17

The simple fact is I don't have £1100 to spend on anything a month. I currently pay very little for the flat we are in its like 400 a month but its a crap hole so thats probably why!

A 2 bed property would be fine but the ones I have seen are smaller then my 1 bed flat! just with an extra box room, just not worth it. The fact only about 2 arund this area at the moment doesn't help.

What scheme? Well this will be shard ownership. the value of this place from the top of my head was around £260,000 with me needing to provide £110,000 morgage as they own the rest.

I would hardly have any cash to eat and provide for my child if I took up this offer (let alone a car)

Sp00n · 5 Aug 2010 at 15:18

Bigger house = more money

I don't get what you are complaining about, yes the market is screwed up, yes you don't get much for your money, it's the same situation for everybody imo.

Wizzkidy · 5 Aug 2010 at 15:20

Sp00n said:
Bigger house = more money

I don't get what you are complaining about, yes the market is screwed up, yes you don't get much for your money, it's the same situation for everybody imo.

Well we came to the conclusion that why get a 2 bed when my family will no doubt expand in the future anyway.

I suppose really i'm moaning about house prices in general I jut dont earn enough wonga

Sorry

Glaucus · 5 Aug 2010 at 15:20

That's ridiculous. You need to accept you can't afford a nice house or look in different areas.

I'm the same I can't afford a "nice" home buy house as new build are ridiculously over priced. Unless I go for a two bed flat.

Which is why the homebuy open market scheme was so appealing, it's a shame labour scrapped it. One of there few good schemes.

For 130k I can get a 2bed flat from a new build or a 3bed house with garage and garden on the open market. I know which I would prefer, if I could get a 10% mortgage.

mame · 5 Aug 2010 at 15:52

I looked into this a couple of months ago. The house in question was £134,000. 50% mortgage so £62,000. Without going through all the figures, the rent was half as much as the mortgage part (and they take this into account as one of your monthly outgoings) so to to be eligible for a mortgage of a homebuy house of £134,000, you would have to be good for a traditional mortage of about £93,000. Most people would be better off owning 100% of a 93k house rather than 50% of a £134k house. If you were a couple with 4-5 young children that wouldn't be moving out any time soon the it might be the only way.

Shimmyhill · 5 Aug 2010 at 15:52

Wizzkidy said:
The simple fact is I don't have £1100 to spend on anything a month. I currently pay very little for the flat we are in its like 400 a month but its a crap hole so thats probably why!

A 2 bed property would be fine but the ones I have seen are smaller then my 1 bed flat! just with an extra box room, just not worth it. The fact only about 2 arund this area at the moment doesn't help.

What scheme? Well this will be shard ownership. the value of this place from the top of my head was around £260,000 with me needing to provide £110,000 morgage as they own the rest.

I would hardly have any cash to eat and provide for my child if I took up this offer (let alone a car)

1100 sounds right for a house worth 260k, are these london prices as it seems a lot for a 3 bed ?

Bare in mind all of these part own schemes are a rip off and you only lose money being in them - quite how the government advertise them as being good for low income families is beyond me.

I looked into them before we bought fully and there is only one winner and thats the government/HA and certainly not the buyer/renter

jamief · 5 Aug 2010 at 16:02

Wizzkidy said:
The simple fact is I don't have £1100 to spend on anything a month. I currently pay very little for the flat we are in its like 400 a month but its a crap hole so thats probably why!

A 2 bed property would be fine but the ones I have seen are smaller then my 1 bed flat! just with an extra box room, just not worth it. The fact only about 2 arund this area at the moment doesn't help.

What scheme? Well this will be shard ownership. the value of this place from the top of my head was around £260,000 with me needing to provide £110,000 morgage as they own the rest.

I would hardly have any cash to eat and provide for my child if I took up this offer (let alone a car)

If you want to live in a house worth £260,000, you have to pay for it, whether that is assisted by one of these ridiculous schemes or not. I would set your sights a bit lower or move to a more reasonably priced area.

krooton · 5 Aug 2010 at 16:03

Shimmyhill said:
1100 sounds right for a house worth 260k, are these london prices as it seems a lot for a 3 bed ?

Bare in mind all of these part own schemes are a rip off and you only lose money being in them - quite how the government advertise them as being good for low income families is beyond me.

I looked into them before we bought fully and there is only one winner and thats the government/HA and certainly not the buyer/renter

Some people cannot afford to both rent 100% and save, this gives them an option to start putting some of that money in to savings of sorts.

Would you rather:

Spend £1000 a month on a property, and at the end of 5 years having nothing to show for it.
or
Spend £1200 a month on a property, and at the end of 5 years have £36k worth of investment to use as deposit for a place outright.

*figures pulled from thin air, just trying to highlight the general idea.

martynbez · 5 Aug 2010 at 16:07

God this is very spooky!

Now me (Network Administrator) GF (NHS) have been in a key worker flat for the past 3 years. 2 bed flat with kitchen, dinner and living room cost 3 years ago £170,00.

We went for the part buy part rent (60/40). Now it's a great location (next to Bluewater shopping centre Kent) but as you have said it's abit of a kill with the rent on to. Total for basic bill's (inc the mortgage and rent) is £1100. But at the end of the day we are on the property ladder and thats how I see it.

Hilly · 5 Aug 2010 at 16:08

you don't pay rent on HomeBuy direct from the off, you either have your schemes mixed up, or have seriously duff information.

With HomeBuy direct, you receive up the 30% of the purchase price on an interest free loan for the period of 5 years. After those 5 years are up, if you haven't paid back the 30% you then start to incur interest payments (mine would be around £80 a month).

I know this because I'm currently on the scheme.

Shimmyhill · 5 Aug 2010 at 16:13

krooton said:
Some people cannot afford to both rent 100% and save, this gives them an option to start putting some of that money in to savings of sorts.

Would you rather:

Spend £1000 a month on a property, and at the end of 5 years having nothing to show for it.
or
Spend £1200 a month on a property, and at the end of 5 years have £36k worth of investment to use as deposit for a place outright.

*figures pulled from thin air, just trying to highlight the general idea.

But the point here is that the combined is more than renting would be and stop thinking that renting is dead money as its not - remember when you buy a house the costs of owning the house will always be more than renting - you have to pay for everything from maintenance to breakdowns.

Homebuy is worse than either option, after 5 years you will not have 36k of investment, you will have covered the interest on the mortgage and then own a tiny % of the house - the equity you own will not be 36k worth.

If you want to buy out the % from government/HA you have to pay for a valuation (every time you want to buy some equity) You then buy a % of the revaluation of the house - lets say you have 50/50 on 150k - you are paying for 75k equity but the 75k is going up in value (the house market is rising) so lets be conservative, in your 5 years prices have gone up 10% so you are now buying a % of £82250

Lets say you saved up 10k in 5 years to buy some equity, you're 10k buys you 2.5k in equity

Homebuy is a government funded scam.