• Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
  • Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!

Help To Buy & Shared Ownnership are bum deals!

Collapse
X
  •  
  • Filter
  • Time
  • Show
Clear All
new posts

    Help To Buy & Shared Ownnership are bum deals!

    All of these government schemes to kickstart the property market look good initially, but once you take a closer look you will ultimately end up paying off an overpriced mortgage.
    The fact that government is implementing these schemes is proof that the market in general in 20% to 30% overvalued and pretty much every respectable analysis of the UK housing market (IMF etc) comes to the same conclusion. Taxpayers money should be spent on health, education etc, not helping people to purchase overpriced property.

    Shared Ownership:-

    Most of these I have looked at, you actually end up paying more (in terms on monthly repayments = mortage+rent+service fee) for your percentage ownership than if you had payed in a normal 100% mortgage!
    In general they don't make things more affordable. In some cases they do but not by that much

    Help To Buy

    After 5 years you start paying interest on the 20% loan so long term you still end up paying the overpriced mortgage. Once people realise that these hair-brained government schemes are a bum deal, prices could drop and you could be looking at high levels of negative equity.

    #2
    Originally posted by hgllgh View Post
    All of these government schemes to kickstart the property market look good initially, but once you take a closer look you will ultimately end up paying off an overpriced mortgage.
    The fact that government is implementing these schemes is proof that the market in general in 20% to 30% overvalued and pretty much every respectable analysis of the UK housing market (IMF etc) comes to the same conclusion. Taxpayers money should be spent on health, education etc, not helping people to purchase overpriced property.

    Shared Ownership:-

    Most of these I have looked at, you actually end up paying more (in terms on monthly repayments = mortage+rent+service fee) for your percentage ownership than if you had payed in a normal 100% mortgage!
    In general they don't make things more affordable. In some cases they do but not by that much

    Help To Buy

    After 5 years No one will start paying interest on the 20% loan so long term you not end up paying the overpriced mortgage. Once I realise that these hair-brained government schemes are a bum deal, but that the governments, past and present, will do anything to keep the house prices artificially high, I'll jump on the bandwagon.
    FTFY.

    What you do realise, is that in 5 years, due to 100's of thousands of people taking these loans, the interest charged, if anything, will be negligible, for if they suddenly leapt to 5% + they'd have a housing crisis on their hands, and not one government would survive it. It will simply roll, like in the states, and is now tantamount to giving people money, or state sponsored Mortgages.

    I am almost mortgage free, but both wife and I will be stocking up on a property each next year to take advantage of it.

    Comment


      #3
      It's a scheme to nationalise vaste swathes of housing stock. The banks will repossess all the houses, the government will nationalise the banks and take the houses as collateral, et voila, no more shortage of council houses.
      While you're waiting, read the free novel we sent you. It's a Spanish story about a guy named 'Manual.'

      Comment


        #4
        Originally posted by doodab View Post
        It's a scheme to nationalise vaste swathes of housing stock. The banks will repossess all the houses, the government will nationalise the banks and take the houses as collateral, et voila, no more shortage of council houses.
        It's one of the most ill thought out schemes that any government has had for a long time.

        They're, pretty much, increasing the costs of housing, without fixing the issue at the base of the high costs. It's hard to put it to an analogy to it, it's that stupid.

        But I do intend using it to my advantage, as does my wife. The main house will be in the kids trust, paid for, and grand. If after 5 years, they do apply interest, I think I'd have made enough money from renting the houses out, to nullify any losses. However, I just don't think they will apply interest to it, for there is no doubt in my mind they'd be a house price crash, and no government comes back after one of those...

        Comment


          #5
          Originally posted by Old Hack View Post
          It's one of the most ill thought out schemes that any government has had for a long time.

          They're, pretty much, increasing the costs of housing, without fixing the issue at the base of the high costs. It's hard to put it to an analogy to it, it's that stupid.

          But I do intend using it to my advantage, as does my wife. The main house will be in the kids trust, paid for, and grand. If after 5 years, they do apply interest, I think I'd have made enough money from renting the houses out, to nullify any losses. However, I just don't think they will apply interest to it, for there is no doubt in my mind they'd be a house price crash, and no government comes back after one of those...
          .

          I agree 100% with your views, indeed My wife and I are thinking the exact same thing Re using one of these schemes next year to get another property. It's quite crazy that the govt is doing this, but the reality is the govt, the BOE and the banks have a vested interest in stocking up the housing market. Are house prices too high? Hell yes, but guess what? They are about to go a whole lot higher over the next 2-3years. Best hop on now and hop off before the next bust (The one that will make Lehaman look like a walk in the park)

          Comment


            #6
            Is this the same one you are talking about?

            https://www.gov.uk/affordable-home-o...y-equity-loans

            You won’t be able to sub-let your home
            assuming that was what you were planning to do with it to pay the mortgage?

            Comment


              #7
              They are a bum deal if you don't need them. If you are stuck in a rut with absolutely no chance of owning a home they give you an out. Probably won't be the most efficient but beggars can't be choosers.
              'CUK forum personality of 2011 - Winner - Yes really!!!!

              Comment


                #8
                Originally posted by Old Hack View Post
                It's one of the most ill thought out schemes that any government has had for a long time.
                They're, pretty much, increasing the costs of housing, without fixing the issue at the base of the high costs. It's hard to put it to an analogy to it, it's that stupid.
                LIKE!

                Originally posted by Old Hack View Post
                But I do intend using it to my advantage, as does my wife. The main house will be in the kids trust, paid for, and grand. If after 5 years, they do apply interest, I think I'd have made enough money from renting the houses out, to nullify any losses. However, I just don't think they will apply interest to it, for there is no doubt in my mind they'd be a house price crash, and no government comes back after one of those...
                I don't think you can use the schemes for second homes or buy to let.

                Hard to predict the future but I think they will charge interest after 5 years... that is what people are signing up to on the dotted line so that is what they are going to do...

                Comment


                  #9
                  Originally posted by hgllgh View Post
                  LIKE!


                  I don't think you can use the schemes for second homes or buy to let.

                  Hard to predict the future but I think they will charge interest after 5 years... that is what people are signing up to on the dotted line so that is what they are going to do...
                  It wouldn't be a second home; the farm is going into trust for the kids anyway, so it will be my only home, per se, and my wife will buy one on her own mortgage.

                  What, like PPI?

                  Honestly, no one is going to suddenly start charging 5%+ on these loans. There will be a fudge, as the Government of the day, will understand, that they would bring house prices crashing down, and this would kill the market dead. Unfortunately, too many financial folk know the housing market is crucial to the economy.

                  I reckon a fudge that it is based on BOE base rates, at most.

                  Comment


                    #10
                    The interest rate on the loan doesn't go straight up ... it starts at 1.75% and then goes up each year (I believe). The end result is ultimately the same, you end up paying the elevated mortgage valuation of the property (all be it with some help on the 20% equity loan).

                    On saying all the above, this problem only really applies t the truly over-valued parts of the country. For example I live in west London and there are flats there going for half a mil these days. These areas are being distorted by foreign money pouring in due to the exchange rate on the Pound and also banker bonus money etc etc. London is a balls up these days... you pretty much need to buy out in the sticks or you are paying through the nose.

                    I think there will be a lot of takers initially for help to buy, but if the schemes loose traction the market will start to slip and there will be another housing crash and as with the last one, it will start in London and spread out from there.

                    Comment

                    Working...
                    X