Home Ownership Schemes

Will definitely have a look into this. We checked out something similar about a year back, but it worked out that the cost of all the fees and such was just astronomical and not worth it at all. Also the properties that we looked at were far from impressive.

Fingers crossed!
 
Musty Pie said:
Ok so for clarification:

You get a loan of say 20% of the properties original value which you pay back along side your mortgage repayments? or do you just clear the loan when you come to sell the property? If this is after 5 years you pay the 1.75% charge on the loan monthly until you either clear the loan or sell the house?
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You don't have to pay it back, but after 5 years you start paying interest. If you sell house they get money back + any rise in property value.
So you really should think about paying it back alongside, or hope that prices rise and your able to remortgage and pay it off from that.

* that's what it seems to say*
 
Musty Pie said:
Ok so for clarification:

You get a loan of say 20% of the properties original value which you pay back along side your mortgage repayments? or do you just clear the loan when you come to sell the property? If this is after 5 years you pay the 1.75% charge on the loan monthly until you either clear the loan or sell the house?
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Musty Pie said:
Ok I think I have missunderstood something.

This "loan" is money that the government lend you which you need to pay back in 5 years to incur no fee, along side your mortgage (ie pay both at the same time?)

Think my simple brain might pop.
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No, No. You don't pay anything back for the first 5 years. After 5 years you pay a 1.75% fee for the value of the loan. So a £30k equity loan = £525 a year. However this fee increases year by year. When you eventually come to sell your house, this is when you can pay off the equity loan.

As has been pointed out though, which I wasn't aware of. You will still be out of pocket regardless if you pay the loan off before the 5 years is up. As apparently you pay back the % equity of the value of the house. So unless the house remain the same value or less. Then you will end up paying back more than you borrowed.
 
I bought in 2010 on a new build with an equity loan deal - though this was 30%. Only had to put down a 5% deposit, but it's enabled me to have my own house.

The good thing around the equity loan is that it goes both ways too, so if the prices fall, so will their share.

Make sure you carry on saving as you'll need to pay the loan back at some point!
 
Glaucus said:
You don't have to pay it back, but after 5 years you start paying interest. If you sell house they get money back + any rise in property value.
So you really should think about paying it back alongside, or hope that prices rise and your able to remortgage and pay it off from that.

* that's what it seems to say*
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Thats what I thought.

Basically we have seen a property in this scheme that really fits the bill well.

Under this scheme we have the option to either save along side paying off our mortgage of 80% of the property value and before 5 years clearing said loan. Or adsorb the interest rate increases after the 5 years has elapsed?
 
Musty Pie said:
Thats what I thought.

Basically we have seen a property in this scheme that really fits the bill well.

Under this scheme we have the option to either save along side paying off our mortgage of 80% of the property value and before 5 years clearing said loan. Or adsorb the interest rate increases after the 5 years has elapsed?
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Yes, but keep in mind that when you want to pay of all or part of the loan, it will be based on the value of the house then, not when you bought it.

Whereas the percentage charge after 5 years is based on the original loan amount.

So in simple terms, you buy a £200k house, and they give you 20% equity loan (£40k)

After 5 years you property has gone up in value to £300k and you want to pay back the loan, you will have to pay £60k back. This is where selling and clearing the loan at the same time is the best option.
If you don't, the percentage charge is based on the original £40k.
 
Yep and you can only pay back in big lump sums. Is it 10%?


Any one know when we can apply for option two?
Need to start paying credit card off. Increase my chances, only want 60-90k mortgages.
 
So really the only risk is that the % charges per year could go up loads leaving you to pay more in loan charges along side your mortgage after 5 years?

However if you sold the property before 5 years they took the % of the sale price leaving you with the remainder?
 
Glaucus said:
Yep and you can only pay back in big lump sums. Is it 10%?


Any one know when we can apply for option two?
Need to start paying credit card off. Increase my chances, only want 60-90k mortgages.
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It says on the website. January 2014...
 
Musty Pie said:
So really the only risk is that the % charges per year could go up loads leaving you to pay more in loan charges along side your mortgage after 5 years?

However if you sold the property before 5 years they took the % of the sale price leaving you with the remainder?
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Not really a risk, how the percentage interest on the loan after 5 years is defined as part of the agreement.

We have a similar deal, and after year 5, we start paying interest on the equity loan at 1.75%, and every year after that it increases by the RPI + 1%

So if in year 2 the RPI was 4%, our interest charge would go up to 1.75*1.05 (1.84%)

Look at page 12 of this to see a handy chart: http://www.homebuy.co.uk/pdfs/HomeBuy-Direct-Nov10.pdf
 
Yeah i have read the whole T's and C's now its making a lot more sense then it did before.

My only concerns with the scheme are as follows:

New build prices are usually infalted already because they are new builds so the deal as such is less apealing because the properties are overpriced.

maintainance fees for new builds are usually quite high.

Still in 2 minds weither to suck it up a bit longer and save a bit more and punt for a 180k mortgage with 10% deposit instead of this.

Hmmm
 
We were looking at new build properties over the previous year, as a part exchange on our current house to save the hassle of selling it ourselves.

New build homes are generally more expensive and you will have to spend additional cash on flooring, landscaping etc..which can't be added to the mortgage if you buy these from your developer.

Also, we found developers are less interested in buyers using New Buy, Part Exchange and other schemes and only allowing you to buy houses that have no interest.
 
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Musty Pie said:
New build prices are usually infalted already because they are new builds so the deal as such is less apealing because the properties are overpriced.
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But can't that also work in your benefit? Like I said above, if you borrow 20% equity loan. And the value of the house reduces, then the loan had less equity value.

But I'm not sure how the repayment part works. Is it just a case of paying back 20% of the value of the house at any time. Preferably I would want to do it in the first 5 years, and hopefully when the house price is at its lowest.

It's all more confusing now
 
After building for 15 yrs my next house may very well be a new build with a high code rating from a good quality builder.

Utility prices are only going one way and what we are building with all the insulation, heat recovery mvhr, solar pv or solar hw and clever stuff means in one 75 sq m apartment we only need one small oil filled radiator to heat the whole apartment.

You can keep your inefficient 1930s houses.
 
SDK^ said:
Also, we found developers are less interested in buyers using New Buy, Part Exchange and other schemes and only allowing you to buy houses that have no interest.
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Really? This must be a regional thing, because all the new-builds I look at up here (Mancs) are heavily promoting the various schemes.
 
There's a very large majority of South East / London / High End properties that are being sold abroad for cash, why would a developer want to get involved with government schemes and complex buying arrangements.

I was at a very large development the other day meeting the commercial director who doesn't need to even build a marketing suite, all the plots have been sold abroad in advance, they look at the 'indigenous' population as the last resort for selling. This is high end River Thames stuff though.
 
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