shared ownership/help to buy schemes

[Zornyan]

Decided now I'm getting older, and since I've made good attempts in the last few years to put myself in an acceptable financial position it might be time for me to consider getting my first place.

Now saving up a 25% deposit just seems like the most obvious answer, but would also take a few years to get 20 or 30 odd grand together spare.

I've been hearing about part buy part rent, also known as shared ownership, and something else called help to buy?

Anyone got any advise? I'm self employed , but I've worked in one location for over 7 years, with the exact same income for 7 years due to me essentially being a full time employee.

Never bought a house and don't have a clue what I should be looking at, so any advise would be greatly appreciated.

Looking at chelmsford, colchester , and anywhere between those two ideally.

[Zeldoz]

I'm looking into the same things. But, personally. If you can get a 25% deposit you don't need this over inflated help to buy schemes.

HSBC are doing a 25/30 year stint. FIXED at 2.9%.. Same paymet every month for 30 years..

I'd have a look wiht them first.. Plus, the Help2Buy seems to be only available on new builds? - I live in a new build new.. Do you? - one advice, the walls are plasterboard and you can hear everything/everyone from around you..

[arry]

I'd engage the services of a good financial advisor and then think long term investment using any incentive arrangements available to you in the here and now.

[Zornyan]

I'd engage the services of a good financial advisor and then think long term investment using any incentive arrangements available to you in the here and now.

What's that in simpleton talk arry? You think these government schemes are worth looking into?

[arry]

Yeah too right. You may be tied into something for a few years but in essence all of this help to buy is free money when those ties end and they withdraw the deals, meaning everyone is back to fighting for smaller new build flats etc

It may well be extremely profitable for you longer term

[Zeldoz]

Yeah too right. You may be tied into something for a few years but in essence all of this help to buy is free money when those ties end and they withdraw the deals, meaning everyone is back to fighting for smaller new build flats etc

It may well be extremely profitable for you longer term

Arn't you all fighting over ridiculously overpriced 1/2/3 bed new builds anyway?

For example;
The CHEAPEST new build flat in my area is £169.995(on the help2buy scheme)... But, a 1 bed privately sold flat in the same area (just developed 5 years ago on another plot in the same development) is £125k?

YES the schemes do have advantages, but the main disadvantage in my mind is you pay so much more for a property within the scheme?!

[green_rs13]

from what I can gather as a person in the same boat,

setup a Halifax help to buy ISA and pay in £200 each month. that has a interest rate of 4% and the government will give you £50 for every 200 you put in upto a maximum payout of £3000(that's £3000 for free)if you put in 12k.

they have changed the rules on the government mortgage incentive scheme to include old houses, but most mortgage lenders give rubbish rates to people on those schemes. and you have to basically take out a loan secured on your house with the government and I can see them moving the goalposts down the line and shafting people.

50/50 shared ownership houses seem to be overpriced. round here 50% of a 120k house will cost you 80k, then you have to pay rent on the other 50%.

[Zornyan]

So, the schemes should be very good from what arry says, and what green says, and I've read online it can all be applied to older houses.

Personally I'm not a fan of new builds, I've helped a friend a few times on some sites, and they seem a bit shit, bad room layouts , stupid 'eco' heating designs etc, and as someone said above, plasterboard everywhere.

I'm looking for a small starter place, so just a 1-2 bed flat at most around colcheater, I've seen places around the 100-120k mark, and if anything to go by, a friend bought a place there for similar budget and that was pretty nice.

I was hoping to have somewhere around 5-8k deposit, is this even enough? How much would all the legal fees and other associated costs be on a place of this size?

Also what do things like home owners insurance cost? Roughly that is

[piman2k]

I'm looking into the same things. But, personally. If you can get a 25% deposit you don't need this over inflated help to buy schemes.

HSBC are doing a 25/30 year stint. FIXED at 2.9%.. Same paymet every month for 30 years..

I'd have a look wiht them first.. Plus, the Help2Buy seems to be only available on new builds? - I live in a new build new.. Do you? - one advice, the walls are plasterboard and you can hear everything/everyone from around you..

i really doubt that. It's probably fixed for 2/3 years. But no way is it fixed for 30 years.

[arry]

Insurance is usually rated these days on number of bedrooms and you're looking at 300 quid ish for your average pad with no valuables etc

[Zornyan]

Insurance is usually rated these days on number of bedrooms and you're looking at 300 quid ish for your average pad with no valuables etc

300 quid a month? Jesus never realized it was nearly 4k a year

[arry]

A year!

[Zornyan]

A year!

**** me nearly had a heart attack! Phew!

That's pretty reasonable then, how much extra on top of deposit is required for all the legal fees?

So, from where I'm looking Chelmsford - colchester, I've seen on some websites what I would count as ideal places, for approx 110-125k.

So with these government schemes, a 5% deposit is ok? So approx 6k deposit would be sufficient?

[Zornyan]

Oh and how big a deal is it I'm self employed? I've done this job for 7 years, earn within 1k of 30k every year, and my Mrs is on 17k a year full time employment

[piman2k]

Shared ownership is great. We didn't take it but our friend who is single did. She has 40% in a flat and as a result a very small mortgage and a reasonable rent. It's a good way onto the ladder for her.

Even if you don't take any of the money out of the help to buy scheme, a 5% deposit will usually be considered a help to buy mortgage anyway. Don't worry about it. Save as much as you can, find a place you like and then go see an IFA or, if you trust your bank, your bank manager.

You might find though that at a bank you need 10%.

[59bhp]

i really doubt that. It's probably fixed for 2/3 years. But no way is it fixed for 30 years.

barclays currently do a 10 year fixed mortgage at about 4% so Its not impossible

[Jonny Wilkinson]

Ollie, if I were in your shoes, I'd sit down and do some sums. All of the figures below are guesses based on little more than my previous flat and house buying experience adapted to a flat in 2016.

help to buy ISA is a good way to put together a deposit
100-150K is going to get you a place in Colchester but not Chelmsford
5% deposit is a minimum and you need to make sure you can "easily" make the payments in case things take a downturn at work
If you're currently living with your parents or in a furnished rental, you need to add in the cost of furnishing the place enough for you to at least move in (bed, washing machine, fridge, cooker, sofa, telly, table chairs etc)
You also need to add the cost to buy (including stamp duty at 2% on anything over 125K so £500 on a 150K house)

So, assuming a 125K flat...

5% deposit = £6,250 (you'll get a better deal if you can put in more)
Solicitors fees etc. = £1,500 (this includes local searches, registering ownership with freeholders, buying shares in the freehold company etc.)
House Insurance = £300
Contents Insurance = £200
Mortgage Arrangement fee = £500
Initial Furnishing = £1,250 (to keep it nice round numbers)

Once you've bought, you've got regular monthly outgoings of
Mortgage £650 (Don't forget that this could go up to anything as much as £1500 a month if the interest rate were to go to 15% - realistically, its unlikely to go above 10% in the next 10 years so £1100 a month)
Ground Rent £25
Service Charge £125
Council Tax £100
Decorating/Furnishing £100

So, figure on about a £10K deposit and regular outgoings of £1K a month MINUS whatever you pay in rent at the moment.

Most of your other outgoing are going to stay the same.

As far as the self-employed thing goes, if you can provide accounts and/or payslips (or sometimes tax returns) that provide your income and your income is at least 30K a year, most banks and building societies will be willing to give you a loan unless you have a bad credit record. Just remember though, just because they will lend it to you, doesn't mean you can afford the repayments.

Personally, I think the part-buy, part-rent schemes are bad news. You usually get the worst of both worlds, it can make selling a complete ballache AND expensive.

One thing I would definitely say go for is the help to buy ISA. The interest is paid gross and even if you choose not to use it to buy a place in the end, its still a good way to save.

Finally, keep an eye on house prices. The buy-to-rent market is changing drastically at the moment because the Chancellor has his knives out for them at the moment and that means more flats coming onto the market, possible price drops in the short term and increases in the cost of renting due to a reduced number of rental properties being available.

[piman2k]

barclays currently do a 10 year fixed mortgage at about 4% so Its not impossible

As astonishing as that is though, it's still not 25 years i.e. whole term fixed.

[Zornyan]

As far as monthly costs go, I'm comfortable with that, my outgoings are less than 230 a month now since I spent last year clearing any debts I owe and getting myself in a good financial position, currently living at home /either other half family due to my job meaning I live away every other week, but we/I have decided it's time to pull my finger out, get moved out and setup.

Now I want to get this done within 6 months or so, as my options are

Go rent somewhere for 800 quid a month + bills
Or get a deposit together, live cheap for a while and put a deposit down.
I don't really want to rent if possible, as every month that 1k is essentially paying someone else's mortgage , and would only mean buying somewhere would be even harder in the future due to being able to save less. So now, is the best time I can save money, and I think I would be much better off doing everything I can to get my name down on a house, so that rather than spending years renting any still a crimping to save, I can get started on the ladder.

It's also more convenient for us as we both smoke, and have pets, both of which exclude us from a multitude of rental properties.

It's basically a big important step in my life, I want to change careers soon, but I feel whilst in a higher earning job I should make the most of my position to save, and even with a basic entry level job (such as my Mrs wage) we could both afford to pay the bills needed each month.

I know 2 people with shared ownership and they both seem happy enough, but I want to get some other people's opinions too, gonna open one of those help to buy ISA next week and start putting money in, and I'm going to give the Mrs money to put on in too, so we should get a few k back from that by the time we buy

[Jonny Wilkinson]

HSBC do a 5 year fixed and a lifetime tracker (something with a fixed rate differential to the base rate i.e. it moves with the banks base lending rate and is a fixed percentage above that base rate).

The banks find it hard to raise money in the markets at a fixed rate for anything more than a 5 year term.