First Time Buyers, 10% LTV, Help to Buy 2 & Morgage advice
Discussion
Hello all,
My partner and I are and moving in together hopefully April/latest May 2014. I have been overwhelmed with everything reading into mortgages, there is so much information available out there.
Going how we are at the moment we plan to have at least £11k by April '14; we are looking to purchase a house around £110,000. I would love to save for 15%, from what I've heard/read the mortgage market opens up so much more and better rates become available. Living in Scotland we earn 20k PA each and have moved back in with our own parents to save for our deposit pot which from a financial point of view is great; about the only thing that is though! Still, needs must.
We were also informed about the Help to Buy '2' scheme which we would be interested in, but we are not sure if this is just a scheme from the government to get FTB's rushing and diving into unmanageable mortgage deals / rates? Not much info been released as the scheme has been brought forward by 3 months. If possible can we take advantage here and use the Help to Buy scheme in April to build on our 11k savings? As at the moment our Loan To Value is 10%? Could we 'borrow' another £5.5k to take it to 15%? or £11k to take it to 20% LTV? This would increase our deposit to £22k; I may be confused though.
I'm aware we have a lot of experienced posters who make a living in this sector who know what they are talking about, mainly Sarnie. (from lurking in the Finance Forums and he always seems to assist people with queries and issues with good recommendation). All help, guidance and information is much appreciated.
If you guys require any more information that will help you help me please ask and I'll be happy to reply either publicly or via P.M if personal.
Many thanks from both of us!
My partner and I are and moving in together hopefully April/latest May 2014. I have been overwhelmed with everything reading into mortgages, there is so much information available out there.
Going how we are at the moment we plan to have at least £11k by April '14; we are looking to purchase a house around £110,000. I would love to save for 15%, from what I've heard/read the mortgage market opens up so much more and better rates become available. Living in Scotland we earn 20k PA each and have moved back in with our own parents to save for our deposit pot which from a financial point of view is great; about the only thing that is though! Still, needs must.
We were also informed about the Help to Buy '2' scheme which we would be interested in, but we are not sure if this is just a scheme from the government to get FTB's rushing and diving into unmanageable mortgage deals / rates? Not much info been released as the scheme has been brought forward by 3 months. If possible can we take advantage here and use the Help to Buy scheme in April to build on our 11k savings? As at the moment our Loan To Value is 10%? Could we 'borrow' another £5.5k to take it to 15%? or £11k to take it to 20% LTV? This would increase our deposit to £22k; I may be confused though.
I'm aware we have a lot of experienced posters who make a living in this sector who know what they are talking about, mainly Sarnie. (from lurking in the Finance Forums and he always seems to assist people with queries and issues with good recommendation). All help, guidance and information is much appreciated.
If you guys require any more information that will help you help me please ask and I'll be happy to reply either publicly or via P.M if personal.
Many thanks from both of us!
Edited by PD9 on Friday 4th October 15:23
There is a thread in the news/politics section starting "Dave brings forward..." which has some relevant info in.
But in essence yes the scheme is designed to give those with low deposits a leg up. I'm not entirely sure that it will give you the LTV recognition comparable to someone who just stumps up the 20% on their own though.
Also the % they assist with 1) attracts a fee five years down the line, that is permanent and increases year on year 2) when you come to sell they get the same percentage of the sale proceeds as they put in at the start.
But in essence yes the scheme is designed to give those with low deposits a leg up. I'm not entirely sure that it will give you the LTV recognition comparable to someone who just stumps up the 20% on their own though.
Also the % they assist with 1) attracts a fee five years down the line, that is permanent and increases year on year 2) when you come to sell they get the same percentage of the sale proceeds as they put in at the start.
Thanks for your input. It's pretty misleading as I haven't read anything advising that if you are 'loaned' say 10% (£11k) in our case to take our deposit to 20% (£22k) that in the situation when we are ready to sell that we would owe 10% of our sale value to the government or bank; I'm not sure who it would go to? Is this the case, and if so would we in essence never fully own the property? We also would be able to pay the full amount of £11k (if we decided to take the ten percent) back within 3 years, so I would not have to worry about incurring fees after 5 years.
PD9 said:
Hello all,
My partner and I are 'taking the plunge' and moving in together, hopefully by April/latest May 2014. I have been overwhelmed with everything reading into mortgages, there is so much information available out there.
Going how we are at the moment we plan to have at least £11k by April '14; we are looking to purchase a house around £110,000. I would love to save for 15%, from what I've heard/read the mortgage market opens up so much more and better rates become available. Living in Scotland we earn 20k PA each and have moved back in with our own parents to save for our deposit pot which from a financial point of view is great; about the only thing that is though! Still, needs must.
We were also informed about the Help to Buy '2' scheme which we would be interested in, but we are not sure if this is just a scheme from the government to get FTB's rushing and diving into unmanageable mortgage deals / rates? Not much info been released as the scheme has been brought forward by 3 months. If possible can we take advantage here and use the Help to Buy scheme in April to build on our 11k savings? As at the moment our Loan To Value is 10%? Could we 'borrow' another £5.5k to take it to 15%? or £11k to take it to 20% LTV? This would increase our deposit to £22k; I may be confused though.
I'm aware we have a lot of experienced posters who make a living in this sector who know what they are talking about, mainly Sarnie. (from lurking in the Finance Forums and he always seems to assist people with queries and issues with good recommendation). All help, guidance and information is much appreciated.
If you guys require any more information that will help you help me please ask and I'll be happy to reply either publicly or via P.M if personal.
Many thanks from both of us!
Thanks for the mention!My partner and I are 'taking the plunge' and moving in together, hopefully by April/latest May 2014. I have been overwhelmed with everything reading into mortgages, there is so much information available out there.
Going how we are at the moment we plan to have at least £11k by April '14; we are looking to purchase a house around £110,000. I would love to save for 15%, from what I've heard/read the mortgage market opens up so much more and better rates become available. Living in Scotland we earn 20k PA each and have moved back in with our own parents to save for our deposit pot which from a financial point of view is great; about the only thing that is though! Still, needs must.
We were also informed about the Help to Buy '2' scheme which we would be interested in, but we are not sure if this is just a scheme from the government to get FTB's rushing and diving into unmanageable mortgage deals / rates? Not much info been released as the scheme has been brought forward by 3 months. If possible can we take advantage here and use the Help to Buy scheme in April to build on our 11k savings? As at the moment our Loan To Value is 10%? Could we 'borrow' another £5.5k to take it to 15%? or £11k to take it to 20% LTV? This would increase our deposit to £22k; I may be confused though.
I'm aware we have a lot of experienced posters who make a living in this sector who know what they are talking about, mainly Sarnie. (from lurking in the Finance Forums and he always seems to assist people with queries and issues with good recommendation). All help, guidance and information is much appreciated.
If you guys require any more information that will help you help me please ask and I'll be happy to reply either publicly or via P.M if personal.
Many thanks from both of us!
The Help To Buy 2 has caused absolute chaos this week. The Government have brought the scheme forward but there aren't any lenders with products, criteria, processes or systems remotely ready yet.
What's intriguing is that I've fielded about two dozen calls and mails about this scheme since Monday. But, I think the vast majority of people are confusing this with the equity loan scheme.
These mortgages are going to be 95% mortgages but a lot of people think they will be getting 75% mortgages like the equity loan schemes and are looking at 75% LTV interest rates thinking they can get the same.
As 95% mortgages, I wouldn't expect the rates to be too dissimilar to current 95% rates and certainly not better than 90% rates, otherwise what would be the point in anyone ever saving more than a 5% deposit?
From what I've been told, any lender that signs up to the scheme will need to pay for the guarantee they get given from the Government for each application, much in the same way that there used to be Mortgage Indemnity Guarantee or Higher Lending Charges when you took out high LTV mortgages a few years ago. Therefore, expect this to be rolled up either into the interest rate or product fees.
It would help if the Government pulled their finger out of their arses and in conjunction with lenders, released specific lending criteria and products so everyone knows where they stand.
From speaking to people this week it feels like most have been waiting for this scheme to come along, but I fear the reality isn't going to be spectacularly beneficial to people, especially when there are already standard 95% mortgages out there....
PD9 said:
Thanks for your input. It's pretty misleading as I haven't read anything advising that if you are 'loaned' say 10% (£11k) in our case to take our deposit to 20% (£22k) that in the situation when we are ready to sell that we would owe 10% of our sale value to the government or bank; I'm not sure who it would go to? Is this the case, and if so would we in essence never fully own the property? We also would be able to pay the full amount of £11k (if we decided to take the ten percent) back within 3 years, so I would not have to worry about incurring fees after 5 years.
You are referring to the Equity Loan scheme where they provide you with a 20% loan. If you don't pay it off and sell up in years to come, you have to pay them back 20% of the value of the property at the time of sale. It's interest free for five years and then you have to start paying interest on it. If the value of the property goes up, so does the amount you need to clear the Equity Loan.....No problem, thanks for your reply.
It is very easy for people like me to get tied up in what’s out there and confused with schemes etc. There are so many. You have detailed the difference in each scheme; initially what mixed me up. I am now able to differentiate between the Equity Loan Scheme and Help to Buy ‘2’. It is an old property we are looking to purchase and are not interested in the Equity Loan Scheme. The product we were considering is the Help to Buy ‘2’, I’m not interested in the Equity Loan Scheme – I wouldn’t want to give up 10-15% of our property value when the time came to sell then be caught short when buying a new property as it doesn’t really help when you want to move up the property ladder.
I understand if we manage to save 10% we would be looking at a 90% mortgage product, we could go into the bank and apply with our savings without assistance for a 90% mortgage - full stop, but could we build on this and receive an extra, for talkings sake 5% through Help to Buy ‘2’ to take our deposit to 15% which would enable us to access better mortgage rates? Would the Help to Buy ‘2’ support / allow this approach or be beneficial considering we would already have 11k savings ready to offer and could access a 90% deposit?
From your views and experience – open to all. What would be the best approach we could take here / you would take in securing a £110,000 mortgage with an £11,000 (10%) deposit.
It is very easy for people like me to get tied up in what’s out there and confused with schemes etc. There are so many. You have detailed the difference in each scheme; initially what mixed me up. I am now able to differentiate between the Equity Loan Scheme and Help to Buy ‘2’. It is an old property we are looking to purchase and are not interested in the Equity Loan Scheme. The product we were considering is the Help to Buy ‘2’, I’m not interested in the Equity Loan Scheme – I wouldn’t want to give up 10-15% of our property value when the time came to sell then be caught short when buying a new property as it doesn’t really help when you want to move up the property ladder.
I understand if we manage to save 10% we would be looking at a 90% mortgage product, we could go into the bank and apply with our savings without assistance for a 90% mortgage - full stop, but could we build on this and receive an extra, for talkings sake 5% through Help to Buy ‘2’ to take our deposit to 15% which would enable us to access better mortgage rates? Would the Help to Buy ‘2’ support / allow this approach or be beneficial considering we would already have 11k savings ready to offer and could access a 90% deposit?
From your views and experience – open to all. What would be the best approach we could take here / you would take in securing a £110,000 mortgage with an £11,000 (10%) deposit.
PD9 said:
I understand if we manage to save 10% we would be looking at a 90% mortgage product, we could go into the bank and apply with our savings without assistance for a 90% mortgage - full stop, but could we build on this and receive an extra, for talkings sake 5% through Help to Buy ‘2’ to take our deposit to 15% which would enable us to access better mortgage rates? Would the Help to Buy ‘2’ support / allow this approach or be beneficial considering we would already have 11k savings ready to offer and could access a 90% deposit?
No. You are still mixing up the two schemes.Help to Buy 2 does not give you 5%. It gives you NOTHING.
It's just a 95% mortgage as far as the applicants are concerned. From the lenders point of view they will take you 5% and then a Guarantee from the Government for circa 15% of your mortgage balance that they can draw on if you fall into arrears or have to repossess the property and it's in negative equity.
The benefit is mainly on the lenders behalf as it means lenders who wouldn't normally offer 95% mortgages, now can as the guarantee protects them.
If you have a 10% deposit, then apply for a standard 90% mortgage.
PD9 said:
No problem, thanks for your reply.
I understand if we manage to save 10% we would be looking at a 90% mortgage product, we could go into the bank and apply with our savings without assistance for a 90% mortgage - full stop, but could we build on this and receive an extra, for talkings sake 5% through Help to Buy ‘2’ to take our deposit to 15% which would enable us to access better mortgage rates? Would the Help to Buy ‘2’ support / allow this approach or be beneficial considering we would already have 11k savings ready to offer and could access a 90% deposit?
From my understanding no .I understand if we manage to save 10% we would be looking at a 90% mortgage product, we could go into the bank and apply with our savings without assistance for a 90% mortgage - full stop, but could we build on this and receive an extra, for talkings sake 5% through Help to Buy ‘2’ to take our deposit to 15% which would enable us to access better mortgage rates? Would the Help to Buy ‘2’ support / allow this approach or be beneficial considering we would already have 11k savings ready to offer and could access a 90% deposit?
Your best bet is to buy with a 10% deposit as Sarnie who is a mortgage expert says you will probably get a better mortgage rate than those buying through the scheme.
Sarnie said:
The Help To Buy 2 has caused absolute chaos this week. The Government have brought the scheme forward but there aren't any lenders with products, criteria, processes or systems remotely ready yet.
What's intriguing is that I've fielded about two dozen calls and mails about this scheme since Monday. But, I think the vast majority of people are confusing this with the equity loan scheme.
what is the public perception of this scheme? I mean from potential clients calling you.What's intriguing is that I've fielded about two dozen calls and mails about this scheme since Monday. But, I think the vast majority of people are confusing this with the equity loan scheme.
Nick Grant said:
If I were you I would just see what your 10% can get you and keep ukgovplc out of it.
^ This.If you have a 10% deposit, I wouldn't be getting involved in any government scheme on a compromised product & rate.
The primary aims of the Help to Buy 2 scheme are;
1) Help stimulate buyers in to purchasing properties that can only scrape a 5% deposit together
2) Help incentivise lenders into offering 95% mortgage that ordinarily wouldn't lend at such a high LTV.
jonny70 said:
From my understanding no .
Your best bet is to buy with a 10% deposit as Sarnie who is a mortgage expert says you will probably get a better mortgage rate than those buying through the scheme.
Thanks Your best bet is to buy with a 10% deposit as Sarnie who is a mortgage expert says you will probably get a better mortgage rate than those buying through the scheme.
You are correct though. There is no way the products for this scheme are going to be better than standard 90% products, it would make no sense at all. People would just be keeping their extra 5% back and go on this scheme rather than putting down 10%.
The hierachy of products, starting with the highest rates first has to be;
95% standard mortgages
95% Help to Buy 2 mortgages
90% standard mortgages
85% standard mortgages
etc etc.
It would make no sense to change that order and price the Help to Buy Schemes lower or equal to standard 90% products. The only way that could be would be if lenders were considering the guaranteed element as part of the LTV which wouldn't make sense as it would then be back to being similar to the original Equity Loan scheme.
jonny70 said:
what is the public perception of this scheme? I mean from potential clients calling you.
From the people I've spoken to about this, it seems a lot of people have been waiting for this scheme to arrive even though most people have no real idea of how it works, how if at all it will benefit them or even if they will be eligible.Most of the above though is the Governments fault as they have released next to no information about it and then just drop it on the industry that the scheme starts now, even though no lender is in a position to actually offer products or criteria yet!
I would agree with sarnie. My company does around 60 - 70 mortgages per month and most clients who have the earnings to back a purchase in the first place tend to have a 10% deposit as as an absolute minimum. The lenders I have spoken to are going to risk adjust the 95% h2b loans so it may be worth just buying with 10% and getting around 4-4.5% interest rate.
Most property prices should pick up at least 3-5% over the next 2 years, more so in London. If you can aim for a 2 year fix, pay off 5% in two years, you should have 20% plus equity and can remortgage on rates sub 3%. Worth a shot and keeps the govt out of your affairs.
Most property prices should pick up at least 3-5% over the next 2 years, more so in London. If you can aim for a 2 year fix, pay off 5% in two years, you should have 20% plus equity and can remortgage on rates sub 3%. Worth a shot and keeps the govt out of your affairs.
Good to see something about the Help to Buy 2 that makes sense.
However, my question, and I think what the OP was thinking about is, given your order of mortgages, Where does the "10% with Help to Buy 2" mortgage fit in? Presumably this would be better than 10% without Help to Buy 2?
But your advice is to just go for a standard 10% mortgage (possible because there are more lenders who will offer 10% rates = more competition anyway)?
However, my question, and I think what the OP was thinking about is, given your order of mortgages, Where does the "10% with Help to Buy 2" mortgage fit in? Presumably this would be better than 10% without Help to Buy 2?
But your advice is to just go for a standard 10% mortgage (possible because there are more lenders who will offer 10% rates = more competition anyway)?
scope6 said:
Where does the "10% with Help to Buy 2" mortgage fit in? Presumably this would be better than 10% without Help to Buy 2?
It doesn't exist. HTB2 is all about increasing the availability of 95% mortgages. Anybody with 10% deposit doesn't need to find a lender that requires government guarantees in order to offer a 90% product - they are out there already.Anybody with 10% would be mad to take a HTB2 with 5% and save the rest, as the poorer mortgage rate you'd get will never be made up by savings growth.
aspender said:
It doesn't exist. HTB2 is all about increasing the availability of 95% mortgages. Anybody with 10% deposit doesn't need to find a lender that requires government guarantees in order to offer a 90% product - they are out there already.
Anybody with 10% would be mad to take a HTB2 with 5% and save the rest, as the poorer mortgage rate you'd get will never be made up by savings growth.
Yep.Anybody with 10% would be mad to take a HTB2 with 5% and save the rest, as the poorer mortgage rate you'd get will never be made up by savings growth.
I think people are STILL getting this scheme confused with the Equity Loan scheme for new builds where you took a 75% mortgage, 20% loan from the Government and supplied a 5% Deposit yourself, therefore only having 75% secured against your property.
The Help To Buy 2 scheme does NOT work like the above. It's a 95% mortgage! The Government is just offering the lender security for three years in case the mortgage falls into arrears or needs to be repossessed.
- Update*
As I mentioned earlier in this thread, I couldn't see anyway of them pricing these products below standard 90% products which has proven to be the case as the two year fixed rate will be 5.19% with a £999 fee. This is part of a range of product but expect the rest to be higher. It's not yet clear if you can add the £999 to the loan or you have to pay it upfront or what other fees (valuation & Booking fees etc) will be payable.
5.19% wedges it almost perfectly between current 90% & 95% products as I thought.
Its been stated that it's not available to anyone who owns another property eg a BTL or a second home, whther it's mortgaged or not.
Also of note, in Scotland (as per the OP) Help to Buy is only on new devs.
http://www.bbc.co.uk/news/uk-scotland-scotland-bus...
http://www.bbc.co.uk/news/uk-scotland-scotland-bus...
Sarnie said:
*Update*
I've had correspondence from a lender today who has confirmed they are releasing a product range via brokers on Friday.
As I mentioned earlier in this thread, I couldn't see anyway of them pricing these products below standard 90% products which has proven to be the case as the two year fixed rate will be 5.19% with a £999 fee. This is part of a range of product but expect the rest to be higher. It's not yet clear if you can add the £999 to the loan or you have to pay it upfront or what other fees (valuation & Booking fees etc) will be payable.
5.19% wedges it almost perfectly between current 90% & 95% products as I thought.
Its been stated that it's not available to anyone who owns another property eg a BTL or a second home, whther it's mortgaged or not.
Fees can be rolled into the loan so long as the fee is included in the LTV calculation and the fees don't take the LTV >95%. I've had correspondence from a lender today who has confirmed they are releasing a product range via brokers on Friday.
As I mentioned earlier in this thread, I couldn't see anyway of them pricing these products below standard 90% products which has proven to be the case as the two year fixed rate will be 5.19% with a £999 fee. This is part of a range of product but expect the rest to be higher. It's not yet clear if you can add the £999 to the loan or you have to pay it upfront or what other fees (valuation & Booking fees etc) will be payable.
5.19% wedges it almost perfectly between current 90% & 95% products as I thought.
Its been stated that it's not available to anyone who owns another property eg a BTL or a second home, whther it's mortgaged or not.
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