Question in your opinion help to buy a good option? Both of my son – who is 30 and 35 – lease for 15 years, and now want to get on the property ladder. They looked at help-to-buy scheme in some depth, but remain confident. I have read such negative things about help-to-buy scheme and don’t want to live in fear and stress, if they go this route. It is better to save more time, more to buy an older property?
And I think your sons have a right to be cautious about help-to-buy scheme. And if they can afford to buy property without using the help in acquisition, it makes a lot of sense. And it’s not just my opinion. Help to buy buyers guide published by the homes and communities Agency (HCA) he says: “If it looks like you might already provide 90% mortgage, you should consider whether the assistance in acquiring equity loan is right for you. There may be better options for you to consider.”
Assistance in the acquisition may be a good option if you are interested to buy a new-build property from house builders registered with the HCA (which they will if they offer assistance in acquiring housing) and need 20% equity loan (40% in London) from the government to be able to complete the purchase. Help to buy is not an option if You do not want the construction of a new assistance in buying a house and should not be an option, if you don’t need government help. Unlike the government the premiums paid in assistance in the acquisition and life ISAS, which can be used to accumulate the Deposit to purchase real estate – the help in purchase of the equity loan is not free money. Although in the first five years no interest to pay on the loan, you will have to pay a monthly management fee of £1.
After five years, the interest starts to accrue on the loan. But the main reason to be wary of equity loan is that if the home value the amount of money that you have to pay when you sell the property or decide to return voluntarily (for which there is a £200 administrative fee). In addition, interest rates on assistance in the acquisition of the mortgage are less favorable than the rates on standard mortgages.
As your sons have mixed feelings about help-to-buy scheme, and as they are young enough (i.e. under the age of 40 years), I would suggest that they go to free government money, what happens to savings in the life of ISA is used to buy real estate.