Help to Buy

[IanBurrows]

Hi All,

As the government schemes re Help to Buy are very topical, I thought this might help explain how they work:

All sizes | Budget 2013 infographic: Help to Buy | Flickr - Photo Sharing!

Kind Regards

Ian Burrows
Marketing Director
Contractor Mortgages Made Easy

[Spoiler]

Are either of these options available for people wanting to buy a property with the intention to let it out ?

[jamesbrown]

Are either of these options available for people wanting to buy a property with the intention to let it out ?

Nope.

[northernladuk]

The outline of Help to Buy released by the Treasury says that to be eligible for the guarantee a mortgage must:

• Be a residential mortgage and not buy-to-let

• Be taken out by an individual or individuals rather than an incorporated company

• Be for a property in the UK with a purchase value of £600,000 or less

• Have a LTV of between 80% and 95%

• Be a repayment mortgage and not interest-only

Help to Buy scheme could be exploited by second homebuyers | Money | theguardian.com

So it will not help you get a BTL mortgage but there is possibility of using it for a second home. I think if you are going to exploit this you are going to have the appetite to swallow some risk. Getting a second home is not the same as a buy to let and it is highly likely the mortgage will come with stipulations such as not renting it out. If you do and get caught there could be some pretty bad fall out from it.

[Power Mortgages Ltd]

Help to Buy scheme could be exploited by second homebuyers | Money | theguardian.com

So it will not help you get a BTL mortgage but there is possibility of using it for a second home. I think if you are going to exploit this you are going to have the appetite to swallow some risk. Getting a second home is not the same as a buy to let and it is highly likely the mortgage will come with stipulations such as not renting it out. If you do and get caught there could be some pretty bad fall out from it.

Whilst the scheme may not rule out the possibility, I think that the individual lenders' criteria will block this to stop 'back door buy to let' mortgages for those who may be inclined to chance renting out the properties to help build a portfolio.

As it currently stands, most lenders restrict the loan to value for second home purchases anyway. They can always enforce this by conditioning the mortgage offer that all other mortgages the client holds must be repaid at the time the funds are released (for the new purchase). Of course if you didnt have a mortgage on your main residence they couldnt really stop it.

The interesting thing will be to see the pricing lenders come out with. A lot rides on the charge the government will levy on the lenders for the guarantee as this will of course be factored into the cost of the mortgages offered to clients. In order for the help to buy to work in any way other than exclusively for those who only have a 5% deposit (and therefore cannot get a mortgage without utilising the scheme), the rates offered if the client has a 10% or 15% deposit would have to be better than the rates you can get through buying without assistance of the help to buy scheme at the same deposit level. If the charge the government ask for from the lenders is too high, this wont happen and it will therefore really be a scheme reserved for people only willing/able to put down 5%.

[Spoiler]

So it will not help you get a BTL mortgage but there is possibility of using it for a second home. I think if you are going to exploit this you are going to have the appetite to swallow some risk. Getting a second home is not the same as a buy to let and it is highly likely the mortgage will come with stipulations such as not renting it out. If you do and get caught there could be some pretty bad fall out from it.

No intentions of B2L (or second home) - sadly not in the position financially at the moment to consider either! Just remebered when this was announced that something like this was mentioned, it was probably second homes. Wonder how many people will (ab)use this offering ?

[Freelancer Financials]

Help to Buy 2 - Guarantee Scheme

The Help to Buy Guarantee scheme has been launched 3 months early. initially it was scheduled to be launched in January.

The good news is that contractor Friendly lender Halifax is one of the first to sign up.

Those of you that remember the old MIG (mortgage Indemnity Guarantee) it's practically the same.

This article covers some of the Q&A

Q&A: how Help to Buy works - The Lolly from Citywire Money

This can not be used for BTL or 2nd property. Available to FTB and home movers. The rates should be out next week.

[Power Mortgages Ltd]

Just to give you guys an update on phase 2 of the help to buy:

It is looking like help to buy will be a waste of time for anyone who is willing and able to put down a deposit of 10% or more. The rates which are to be released are 4.99% for a 2 year fixed rate via Natwest/RBS and 5.49% for a 5 year fixed rate and with Halifax, a 2 year fixed rate of 5.19%. The rates are available up to 95% regardless of what deposit you put down, therefore if you are putting down a 10% deposit, you'd be better off not using the HTB scheme.

Furthermore, Halifax have taken the stance that you cannot have any background mortgages and apply for the HTB scheme so if you have a buy to let or intend on keeping your current property, or even have a second home at the moment, you wont be eligible for the HTB mortgage.

Natwest are only offering their HTB proposition through the branch until later on this year when their systems will be updated and they will be able to offer their proposition through the mortgage intermediary networks.

Halifax will take applications for the HTB II from Friday.

[northernladuk]

Makes sense. Thanks for the update.

[Waldorf]

I just don't get the buy to let as an investment.

The returns are crap and that assumes that you have no vacant periods, that the tenant hasn't wrecked the place, and of course there are the costs such as insurance, repairs, council tax if vacant, etc. I will stick to my investments in shares, you can get good returns on property companies, without the hassle of tenants etc.