Help to buy scheme and contracting

The best approach with the Help to Buy scheme is actually to get on the scheme, and overpay in to a fund to clear the equity loan, or cover the guarantee portion.

Example
Buy a £200k house - put down a 5% deposit £10k
Get a HTBS Equity Loan/Guarantee for £40k

Over the 5 years the loan is interest free save as much of the £40k as possible on top of normal mortgage repayments.

At 5 years use the lump sum saved up to pay off the equity loan, or off the mortgage to cover the guarantee.

Yes its going to be tight but the idea of the help to buy is you get on the property ladder and use the benefit of the scheme to push you further up the chain. Its not supposed to be cheap or easy when buying a house so don't fall in to the problem that so many seem to be in which is not taking advantage of low interest rates or schemes to pay off as much as possible of the biggest debt of their lives!


£150k mortgage over 30 years works out to £679 payment at a loose 3.5% rate.
That gives you £321 you can already afford to overpay/save towards lump sum over 5 years that's £20k, assuming that your partner will get a job in this time as well or that your dividends will be favorable this 20k pot will only increase.

Shared ownerships still have their benefits but your also still paying rent and they close down your property search quite considerably, as well as many share ownerships coming with premiums which is basically just paying for the privilege just to buy the house...although our first house was shared ownership, I would suggest if you don't have then don't.
 
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Bassmansam said:
Whats wrong with shared ownership? I know a few people that have done it and have had no problems. Having a place is a benfit no?
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You don't have a place, thats the point.

You own a bit of a house and rent the rest from a Housing Agency, but the Housing Agency call all the shots. If you want to do anything you need their permission. If you want to sell you have to give them first refusal. The HA are also responsible for setting the value and often under value them. Its up to the HA to market the house which they are ill-equipped for. And usually you can't start the process of selling your share until you have already found somewhere else to move to, which can be difficult with no confirmed value or anything on your sale.

Basically its no better than renting a house, but far more difficult to get out of, and often not much cheaper.
 
balky12 said:
You referring to the Shared Ownership scheme?

I'm pretty certain Help to buy scheme doesn't have a salary cap
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Shared Ownership is a Help to Buy scheme, and it has a cap.

There are other Help to Buy scheme that don't, including Equity Loan, Mortgage Guarantee, etc.

Help to Buy is a banner that encompasses a number of different things.
 
Syla5 said:
The best approach with the Help to Buy scheme is actually to get on the scheme, and overpay in to a fund to clear the equity loan, or cover the guarantee portion.

Example
Buy a £200k house - put down a 5% deposit £10k
Get a HTBS Equity Loan/Guarantee for £40k

Over the 5 years the loan is interest free save as much of the £40k as possible on top of normal mortgage repayments.

At 5 years use the lump sum saved up to pay off the equity loan, or off the mortgage to cover the guarantee.
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This.

I was thinking similar. But instead overpaying on your mortgage repayments for 5 years by the 10%. Then remortgaging the extra 20% into the house. Ok increases your mortgage by 5 years but you have nicer house. Shouldn't effect your mortgage repayments too much if my maths is correct. In 5 years you should be earning a fair bit more anyways.
 
[TW]Fox;28880329 said:
I think the idea is that if you are earning over £60,000 a year you don't need to rely on government handouts to buy a house - with that level of income you can surely scrape some sort of deposit together?! Trying to engineer your finances so it looks like you earn less than you do to qualify for the scheme probably isn't sensible.

As a contractor you are presumably far more mobile than any other type of worker would be as well....
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its not really a hand out.

one thing most people seem to miss is its 20% of the house.

so even though the first 5 years are interest free the amount you have to pay back could go up dramatically in that time as the house value rises.

also the staircasing payments can be very weird (around ehre its a minimum payment of 10% of the total value of the share)
 
Skeeter said:
You don't have a place, thats the point.

You own a bit of a house and rent the rest from a Housing Agency, but the Housing Agency call all the shots. If you want to do anything you need their permission. If you want to sell you have to give them first refusal. The HA are also responsible for setting the value and often under value them. Its up to the HA to market the house which they are ill-equipped for. And usually you can't start the process of selling your share until you have already found somewhere else to move to, which can be difficult with no confirmed value or anything on your sale.

Basically its no better than renting a house, but far more difficult to get out of, and often not much cheaper.
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Thanks for that, me and my gf are getting to the point where we are ready to move out, our family are very much against renting and would prefer us to buy on a full mortgage, but that won't happen as i don't have a big enough deposit. However, i do have enough for a new build shared ownership flat, i viewed one in Greenwich by the 02 arena valued at 480k, brand new. Never would be able to afford that outright but through shared ownership i could afford that place.

I am fine with not owning 100 percent of it, at least a 25% is still an investment of sorts as opposed to renting.
 
Bassmansam said:
Thanks for that, me and my gf are getting to the point where we are ready to move out, our family are very much against renting and would prefer us to buy on a full mortgage, but that won't happen as i don't have a big enough deposit. However, i do have enough for a new build shared ownership flat, i viewed one in Greenwich by the 02 arena valued at 480k, brand new. Never would be able to afford that outright but through shared ownership i could afford that place.

I am fine with not owning 100 percent of it, at least a 25% is still an investment of sorts as opposed to renting.
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See if you can get it on an Equity Loan rather than Shared Ownership. As people have pointed out above, you can 'play the system' with an Equity Loan and end up in a decent position after 5 years. But with Shared Ownership your no better off than if you were renting.
 
Tefal said:
its not really a hand out.

one thing most people seem to miss is its 20% of the house.

so even though the first 5 years are interest free the amount you have to pay back could go up dramatically in that time as the house value rises.

also the staircasing payments can be very weird (around ehre its a minimum payment of 10% of the total value of the share)
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The Shared Ownership scheme with the £60k earnings cap is not the 20% loan scheme, that's Equity Loan and has no cap on it for earnings, just a £600k cap on the house price.

People are confusing a few different things as they all come under the same banner of Help to Buy.

(And on Fox's point, my local Help to Buy agent actually asked us to commit fraud on an application so that we would qualify, so fiddling your personal income a bit is hardly a stretch :p).
 
That's what I'm interested in, the equity loan, I thought that the cap applied to that too :) glad it doesn't

I'll go back to my tax dodging now, thanks folks
 
Nope, just the Shared Ownership scheme, which is the one aimed at low income households. I was blocked from buying a shared Ownership house (that I was already living in, but that's a different story!) because "I could afford it", and instead it had to be sold to someone who couldn't afford it. Shared Income falls under Affordable Housing and quite rightly shouldn't be sold to people like you (or me for that matter).

But there are other Help to Buy schemes which are open to anyone, a lot of people won't even know they are on one (got a 95% LTV mortgage recently, it was probably Help to Buy backed), so saying Help to Buy is government handouts designed for poor families is wrong. Part of it is, but most of it isn't, and ultimately its Government handouts designed to help developers and mortgage lenders anyway ;).
 
Skeeter said:
Nope, just the Shared Ownership scheme, which is the one aimed at low income households. I was blocked from buying a shared Ownership house (that I was already living in, but that's a different story!) because "I could afford it", and instead it had to be sold to someone who couldn't afford it. Shared Income falls under Affordable Housing and quite rightly shouldn't be sold to people like you (or me for that matter).

But there are other Help to Buy schemes which are open to anyone, a lot of people won't even know they are on one (got a 95% LTV mortgage recently, it was probably Help to Buy backed), so saying Help to Buy is government handouts designed for poor families is wrong. Part of it is, but most of it isn't, and ultimately its Government handouts designed to help developers and mortgage lenders anyway ;).
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Oh yes, me and my gf earn 43k combined and we enquired about a 480k flat by the 02, only to be told that we earn to much!! Crazy.
 
Contracting...

Rule 1 - Pay yourself minimum wage
Rule 2 - When you first start you will be skint for 3 months
Rule 3 - Take Dividend from past 3 months (save some for next 4 months)
Rule 4 - Take dividend from past 4 months (save some)
Rule 5 - I hope your still paying yourself minimum wage
Rule 6 - Take dividend from past 5 months
Rule 7- Congratz you have broken the contracting back and will be forever minted if you keep on contracting.
 
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