Help to Buy

[kentlad]

Hope I'm popping this in the right place.

So, quick summary of my current situation.

I'm 25, living at home. Saving for a deposit for my first place. I'm desperate to move out ASAP as I've got 'that' itch. I need my own space & it's getting me down the fact that I still live at home. Haven't been 'happy' for quite some time if i'm honest.

I earn 30k P/A but a lot of that goes on travel into work (Central London). So i'm looking to move closer in. I've found a few 2/3 bed houses for around the 200k mark which i think is affordable to run, on a monthly basis. I'm probably leaning more towards a two bed, as it will be a lot cheaper on bills such as gas etc.

Deposit wise - I'm looking to move once I've saved around £15-20k (so hopefully in the next year or so)

Does anyone have any first hand experience with the HTB scheme? How the process actually works with regards to applying etc. I've had a browse online but everything that comes back is quite vague.

One last thing i couldn't find any information on...if i was to buy a house & let out the 2nd bedroom to say, a friend...would i still be able to get onto the HTB Scheme?

Any help on the above would be much appreciated!

[Defcon5]

kentlad said:

One last thing i couldn't find any information on...if i was to buy a house & let out the 2nd bedroom to say, a friend...would i still be able to get onto the HTB Scheme?

I think decisions like that should be made after you have bought the house, and maybe if it was a friend there wouldn't need to be an official agreement that you would need to notify them of

[kentlad]

Defcon5 said:

I think decisions like that should be made after you have bought the house, and maybe if it was a friend there wouldn't need to be an official agreement that you would need to notify them of

completely agree, it was just a thought as i know one of my friends is looking to move out but can't afford to buy...wasn't a make or break part of the above. Cheers!

[1scotthawkins1]

I used the HTB scheme in march this year for my first place with the mrs.
We were just before the new lending scheme came into place so i don't know how much has changed but our combined was just shy of £40K and our bank would lend us upto £166,000 with a 5% depo. in the end we went with £150,000 and used 5% used the rest of our savings for solicitor fees stamp duty etc. All in the end cost was around £11,500.
We did most of our application online and only went into branch once.
Our agreement was that no one else over age of 18 could live in our property apart from those on the deeds.

Dont know if this helps much
Scott

[kentlad]

1scotthawkins1 said:

I used the HTB scheme in march this year for my first place with the mrs.
We were just before the new lending scheme came into place so i don't know how much has changed but our combined was just shy of £40K and our bank would lend us upto £166,000 with a 5% depo. in the end we went with £150,000 and used 5% used the rest of our savings for solicitor fees stamp duty etc. All in the end cost was around £11,500.
We did most of our application online and only went into branch once.
Our agreement was that no one else over age of 18 could live in our property apart from those on the deeds.

Dont know if this helps much
Scott

That's a great help mate. Out of interest, and if you don't feel comfortable answering, then please don't... but, what are your monthly repayments on that? Presuming the house was £200k?

And thanks for the clarity on other people living in the house! Great to know from someone with direct experience! Sounds like it was quite an easy process too!

[Stevemr]

I am a broker, working with new build so do these all day long.

Application is simple the new build company will probably have a broker working with them who will do the application for you.

You can not rent any part of the house on this scheme.

You put in 5% equity loan 20% mortgage 75%

This means mortgage payment less as you are borrowing less and because loan to value is less you get a much better interest rate and credit scoring is easier as well.

You pay nothing on equity loan for 5 years then interest at 1.75% per annum (goes up v slightly each year.) Important thing to rmemeber is you pay it off in one or 2 lump sums and when you pay it back its 20% of value of property at that time.

Its a good scheme.

People will come on here to knock newbuild, but when you factor in low bills due to insulation being so good, and hopefully no maintenance bills etc!

[blank]

3 beds for £200k sounds cheap for something close to London! Are you looking around Chatham?

I would check some affordability criteria as £150k is likely to be right on the limit with a £30k salary.

[Stevemr]

With affordability lenders will take in to account interest at 3/4% on HTB loan in their calcs.

[1scott12007]

blank said:

I would check some affordability criteria as £150k is likely to be right on the limit with a £30k salary.

With my application they would only lend £166k and our combined was £40k so I would say they may require a larger deposit to aquite the £200,000.

Our repayments are around £700 with the htb on £1500000
I would also recommend looking at the phase 2 of the htb rather than phase 1 but this was preference to us.

[Stevemr]

There is a Help to buy calculator as well and max is 4.5x salary. Any loans/ credit card debts etc. will affect affordability.

[kentlad]

blank said:

3 beds for £200k sounds cheap for something close to London! Are you looking around Chatham?

I would check some affordability criteria as £150k is likely to be right on the limit with a £30k salary.

I was looking around Greenhithe, Gtone etc. I did look at crayford but i just can't find anything for even close to that money. Like i said, its more likely to be a 2 bed than a 3 bed but it depends on the market. £700 as mentioned below, is pretty much affordable, if i don't go crazy with general living expenses etc.

Thanks for all the responses. Definitely helpful!

Thanks for the info Steve, definitely food for thought!

[Burgmeister]

Which Help to Buy scheme are you looking at?

HTB1 (new homes only) = 5% Deposit (funded by you), 20% Equity Loan (funded by the HCA) and 75% Mortgage (funded by a mortgage lender)

HTB2 (new and second-hand homes)= 5%-20% Deposit (funded by you) and 80%-95% Mortgage (funded by a mortgage lender)

If it's HTB2 you're looking at it would be worth doing a comparison of lenders own products for price. For example Nationwide has a 95% LTV scheme called Save to Buy where rates may be better than the equivalent on HTB2 for the same LTV.

Remember the higher the LTV means the higher monthly payment and higher credit requirements.

Contrary to what has already been posted neither HTB1 or HTB2 prevent you from renting your spare room out.

[1scott12007]

Burgmeister said:

Contrary to what has already been posted neither HTB1 or HTB2 prevent you from renting your spare room out.

Do you know this for sure as this is something I was going to seek advice on, we have a spare room which we wanted to let to exchange students.

We are with natwest and the mortgage advisor informed us this was not allowed with our policy?

[Burgmeister]

1scott12007 said:

Do you know this for sure as this is something I was going to seek advice on, we have a spare room which we wanted to let to exchange students.

We are with natwest and the mortgage advisor informed us this was not allowed with our policy?

Yes. You cannot rent the property as a whole as it must be your home but you can rent a spare room out.

[Stevemr]

Burgmeister,

Thats interesting because its not what I was told by the HTB agency.

I will recheck with them.

[Stevemr]

You are right, from the post sale book, I will have to educate the agency!

Lodgers:
Thank you for your enquiry regarding getting a lodger.
This is permitted under the scheme, as long as you will still be living in the property.
A Declaration of Interest must be signed by the person staying to confirm they have no interest in the ownership of the property.

[AyBee]

Where would one find out about new-builds offering HTB?

[Burgmeister]

AyBee said:

Where would one find out about new-builds offering HTB?

Builders have to opt-in to HTB1 and a scheme requirement is that builders must then make HTB1 available on all homes they market for sale. They are not permitted to be selective about its usage if the buyer is eligible for the scheme.

There is not a published list but the HCA has >1,000 builders registered to participate. Easiest thing is if you find a new build you like just ask the builder if they are participating in the scheme.

For HTB2 the decision lies with the lender.

[ben_h100]

The missus and I used HTB1 to buy a new build earlier this year. We didn't want to use it at first, but after months of finding nothing we curiously stumbled across a new build that the developer was willing to convert to a 4 bed (loft conversion) provided we could say yes ASAP. As has been mentioned, the hassle free nature of a new build as well as the reduced bills (loads of insulation, building regs etc) eventually appealed to us greatly. Just make sure you pick the right new build; house type, area, etc.

To give you a rough breakdown, our house was £189k, we went with 5% deposit and the other 20% coming from HTB. We earn a combined £50k and our monthly mortgage cost is just under £600. Quite comfortable for us and when the missus graduates we will shift to a shorter term (30 years to start just to get us used to the financial commitment as a couple - I had a property already).

You can only rent the entire house under exceptional circumstances (in the armed services and posted overseas/other end of the country being an example), but a room should be fine. In fact, I would keep it as a casual arrangement if it's a mate.