Summary
At this stage, the Governments “Homebuy” mortgage scheme for first-time buyers seems a waste of time. This article explains why.
Mortgages. First-time buyers let down by the governments Homebuy scheme.
Author: Michael Challiner
Late last year, accompanied by the usual razzmatazz,
- Home Mortgage Loans
- More people are paying off their mortgages early. How do they do it? This article explains some ways.
- Interest Only Home Loans
- An introduction to the workings of an interest only mortgage.
- Foreign Currency Mortgages. What are they and what are the risks?
- Foreign currency mortgages could save you a lot of money but the risks are high. This article explains.
- Mortgages. First time buyers let down by the governments Homebuy scheme.
- At this stage, the Governments Homebuy mortgage scheme for firsttime buyers seems a waste of time. This article explains why.
- Loans. Mortgages. Credit cards. Interest rate rises around the corner.
- The financial institutions are expecting interest rates to rise. When and what's expected?
- House price rises – a cautionary tale
- The housing market seems to be buoyant with house sales exceeding expectations in some parts of the country. If mortgage rates start to rise, the market may see a correction. Take care not to take on too much debt.
Under the Homebuy scheme, first time buyers take out a mortgage for 75% of a home's value with no deposit and the Government and the mortgage lender will in practice buy the remaining 25% of the property. Then when the borrower eventually decides to sell the property, the borrower will receive 75% of the net sales proceeds and the remaining 25% of the sale price will go to the Government and the mortgage lender. In the mean time, if the owner wishes to buy out all, or part, of the Governments or mortgage lenders 25% interest, the borrower can simply repay the money the Government and mortgage lender initially put in.- there will be no penalty.
In our view, first time buyers shouldn't become too excited about this scheme for six reasons: -
• The Government has recently confirmed that buyers will have to pay a 1% premium on top of the usual mortgage rate.
• There has been no announcement as to the amount relative to income, insurance ) which borrowers can qualify for. So at this stage it's impossible to judge what sort of house a first-timer could buy. However, we bet it's a very small one!
Did you know?
53% of all car insurance is now bought online. That's because buying online car insurance helps you find the best deals. And it's important to remember that when it comes to renewal time, you need to shop around the Internet again! Don't automatically accept a renewal notice without checking out prices first – you may still get it cheaper!
Did you Know?
Personal secured loans are widely advertised on the Internet but research has found that of those applicants who are accepted, 43% are offered a rate that is higher than the advertised rate (source: Experian, the UK's largest credit reference agency). Therefore, if you're looking for a cheap secured loan, it's probably best to apply through a loan Broker. The Broker will know exactly which lenders will accept your credit history and find you the cheapest possible loan.
Did you Know?
Early methods of transferring or distributing insurance risk were practiced by Chinese and Babylonian traders as long ago as the 2 nd and 3rd millennia BC. Chinese merchants traveling treacherous rivers would redistribute their stock across many boats to limit the loss due to any single boat sinking. The Babylonians devised a system which was recorded in the Code of Hammurabi, circa 1750 BC and was used by early Mediterranean sea traders. If a trader received a loan to fund his shipment, he paid the lender an extra sum in exchange for a guarantee that the lender would cancel the loan should the shipment be accidentally destroyed or stolen.
Did you Know?
According to Experian the largest UK credit agency, 53% of loan applications are refused. So if your credit history is imperfect, apply for bad credit loans through a loan Broker. The Broker will consider your credit history and apply to the lender most likely to favourably look at your application. That way you get your loan with the minimum fuss and at the best rate available to you.