First time buyer

[Wee gus]

Hi guys looking for a bit of advice, currently looking into buying my first property, but all this mortgage stuff is frying my brain lol.
i have been lookin into these MI new home scheme offerd by some of the large house builders, but where do i stand with these? do you repay back the 25% of the government money or what?

im 23, i have 8k saved but could easliy get another 4k taking me to 12k for a deposit.

property wise im looking at something 3 bedroom semi or detached with a garage.

any advice welcome guys

[Sarnie]

The Mortgage Indemnity is not a loan, you don't borrow it and therefore you don't pay it back.

It's essentially a pot of money for the lender to draw on if you fall into arrears or they have to respossess the house etc.

[Rickeh]

I'm in almost the exact same position mate but i'm probably going to buy with the girlfriend so we can get a bigger mortgage. She's just finished uni and doesn't start her job til September though.

Looked into the MI new home thing and it looks great, i'm not entirely sure about the logistics of paying the government part back, but it's interest free for 5 years and 1.75% + RPI inflation each year each year after that. Roughly worked out, though, that if you go for the full 250k mortgage the govt part, since it's interest free, will save you around 8k in interest payments in the first 5 years given current mortgage rates of 4-5%.

I think in January there's a deposit guarantee coming out that's up to 15% of your mortgage so you'll be able to be offered a higher LTV amount from lenders that would generally only be able to offer lower amounts given a persons risk profile.

I think we'll end up waiting until the extra part of the scheme comes out in Jan so we can buy a house that's not a new build and still get the larger mortgage because of the govt guarantee.

[big_boz]

Im not sure about the above...i am lookimng to buy at the momment and have now discounted the government schems as im keeping my current property and they can not be used on 2nd residential mortgages...but....

Help to buy is a "government backed" 95% LTV mortage currently on new homes but open to pre-built properties in the new year, there is no government contribution but they back the loan somehow to reduce the lenders risk, not quite sure how this works but the rates appear to be better than a standard 95% LTV mortgage from the quotes i had.

The New buy scheme is the one where you can obtain a 75% LTV mortgage with a minimum 5% deposit where the government provide an up to 20% total loan which as you rightly say is interest and payment free for 5 years after which time it becomes interest bearing.

Now this is all well and good BUT in my experience of looking buying a new home really does not get you as much for your money as a "used" home. For instance £250k will get me a poky "4" bed (3.5 bed really) new build with integral garage where i am looking, yes they are nice but the same money gets me a 10-20 year old spacious 4 bed with double garage, much bigger plot and just in general more.

So OP, i would suggest if you can scrape the £12k this gives you a total prospective 95% LTV non government mortgage, of which there are many available of up to £240k...i would strongly suggest you see what else is out there as i would suggest that based on what i have seen you should be able to get an equivalent home for £10-20k less...thus saving you on interest in the long term that negates the prospective worse rate, and also reducing your total monthly commitment in the process.....Bloody hell i sound almost like a grown up!