The only benefit these schemes have are the low deposit requirements. However all the additional costs add up to the same monthly cost if not higher than a regular mortgage property. If its the only route you can take then it's there for people to look into. If you can save up a few more years then opt to go for a regular mortgage route.
I'm literally making this decision tomorrow! Thanks for the video, I think the help to buy scheme is the better choice for me. Just they're harder to find I feel. Shared ownership places seem to be easier to find or have more variety. I'm going solo for this so I want to be safe with money each month and not struggle.
@@SelfInvested with what budget my bank they have offered me for my mortgage and me living in London, seems the shared ownership route is the way for me. Which kinda sucks but like you said both schemes have their pro's and cons
Thanks for this video! Very interesting seeing a side by side comparison of the 2 schemes. As a sole purchaser I've always viewed Shared Ownership as the cheaper option given that I can purchase as little as 25% with the option for staircasing later...
I'm glad you found it interesting. I think Shared Ownership is more accessible because the smallest share you can buy is 25%, whereas with H2B, it's 60% (if you get a 40% loan in London). Also, the full market price of properties under Shared Ownership tends to be lower. However, generally speaking, all things being equal, as shown in the example, the H2B loan comes out cheaper. Also, just to say, staircasing is not the cheapest way to buy a property outright. Generally speaking, it's more expensive than buying a property outright. In reality, most shared owners will not be able to staircase to 100%. For shared owners that want to own their home outright, the best most can hope for is that the value of their home increases enough so that they can sell and buy a cheaper property outright.
@@SelfInvested yes I hear you, totally. For me I don't intend to staircase, the plan is shared ownership for 3-5 years then sell my share and move on to buy outright... one just hopes that a profit can be made at the point of sale! The figures I'm looking at work out cheaper than paying rent for a property of the same standard. I think if I was looking for something long term and couldn't afford a deposit outright I'd be looking more a H2B.
Thanks for determining the differences which is valuable info 👍🏽 Both schemes seem unaffordable to those trying to get on the ladder which is exaggerating the housing crisis i feel🤔
My pleasure 😉 Tbh H2B is not considered an affordable housing product, but Shared Ownership is - so it’s funny how the monthly cost for H2B can workout cheaper than Shared Ownership!
One of the best explanations I have seen on youtube so far, thank you! I have a question on the Help to Buy selling process, would I need to repay the whole loan before selling the property, a bit like having to complete the staircasing in the shared ownership case? Thanks!
Only one of the best?! 😉 When you sell your HTB home, you need to repay the loan. From my understanding, this is done as part of the selling process - as in it doesn’t need to be done as a completely separate exercise before starting the selling process. With shared ownership, the housing provider usually tries to sell your share in the first instance. If this process is unsuccessful, then you can usually sell 100% on the open market and the ownership is staircased up to 100% as part of the selling process.
@@SelfInvested When the house buyers ownership is staircased up, do they have to make an outright payment? or is this paid for through the selling process?
Hey there! If I understand you correctly, you can staircase your ownership without selling, but you have to pay for it at the time you staircase - typically by remortgaging to borrow more money to repay it
Another great video Lemuel and many thanks! You are getting more popular and wish you luck indeed! I have been searching for this type of a comparison video to see which one would suit better. Now you justify me HTB is better at least if you want to buy and sell it within a 5-10 years time period plus saving some money unless you staircase the property.
You're welcome! My preference would be Help to Buy as well. I might change the name of this video to Help to Buy vs Shared Ownership, so it's clearer what the video is about...
I've only just come across your videos Lemuel and they are so interesting and helpful!! Thank you. I think now shared ownership and the help to buy scheme aren't for me 😂. I think I'll just be buying a house/flat outright as it appears it's much less stressful and less expensive :-)
You are very welcome! These schemes do work for people, but they wouldn’t be my Plan A. If I had to choose between the two, I think H2B would be my preference...
@@SelfInvested Oh ok, thanks for that advice! Really really helpful. I can afford to save up for a deposit to buy outright though even if its not quite in the area I want to live in. I don't mind living a few miles away.
@@SelfInvested Thank you for all these replies 😅. You don't need to reply to the next one if you too busy though lol, as I know your a busy man and I'm messaging you a lot. Yes, I feel that it's maybe best to stick to what you know regarding this. It appears to be so much simpler to just buy a blinking house outright without all this shared ownership/help to buy nonsense 🤣. Actually, I am really lucky that I can afford to save up for a deposit and I earn enough to be able to get a mortgage 😊.
@@lucydawkins4552 Haha! Please don’t worry! If you have a question, then ask. I try to respond to all the comments. I just appreciate people watching these videos because I put a lot of effort into them, and it the easiest way I can show my gratitude :)
Im a first time buyer what’s currently come across a shared ownership 1 bedroom flat at 25% shared ownership costing 72 thousand I just wanted to ask for example if I was to take up this option near down the future once that was paid of would that me be Scot free or would I then be required to pay a deposit just wondering since the lease is almost 120 years remaining
Hi Lemuel. Looking into H2B and found your channel very helpful. Thanks for all the advice. One question from this video, what sort of permision is needed from the H2B scheme for extensions, etc? Looking at a 2 bed house with H2B in Brixton/Streatham. It has a roof terrace and is marketed as a property with potential for 3rd bedroom (STP). As I have 2 kids, that sounds really promising. Indeed it is at the very top range of H2B, so I am a bit weary of punching above my weight. But I reckon anything is better than the 2k rent I pay every month for many years now. My understanding is that even with 330k mortgage, the repayments would be nearly half of my current rent. And it's a house, so no service charge. Indeed, as some have said, one would rather save for longer and not rely on this scheme. But so far I found that if a first time buyer (who does not earn over 100K a year) wants a decent family property with 2 toilets within London's zone 2 (even 3), H2B is the only way. Unless one has over 100k in savings or something like that. Maybe that's a bit too much information 😁, I know. But what do you reckon?
Thank you Felipe for the feedback. I'm glad you find the videos helpful! Please ask anything you wish!! In terms of permission, as I understand it, you'd need to get consent from the people that managing the H2B scheme in your area. The equity loan is linked to the value of your home. So, if you make structural alterations without permission and it increases the value of your home, the equity loan amount you owe will increase. However, if get permission to make structural alterations and the value of your home increases, they may ignore the value of that alteration when they work out how much you owe on your equity loan. BUT make sure you check this with the people managing your H2B loan!! I can't give you 'advice' because I'm not qualified or insured to, and even then, I'd need to understand your situation better. But personally, I potentially would look at an existing older house further out, which is cheaper and I could buy outright - but TBH, what you described doesn't sound bad! I think I'd be interested in that house in a similar situation. If I did go for it, I'd make sure I could afford the interest when it kicked it and for the foreseeable future! Also, I make sure I had a plan for selling if I needed to in the future...
@@SelfInvested Thanks again Lemuel, regarding the structural alterations that now makes sense. I'll look further into it. As far as looking for a property further out, I did think about it but we are not willing to do so due to our jobs and the fact that, ideally, we'd like to keep the kids in the same school/circle of friends. That in my opinion is worth a lot, especially when considering the commuting costs we'd incur on a daily basis. As far as affording the interest, I'm quite confident that this would not be an issue. Given the breakdown I've been given by my mortgage adviser, I'm sure we'd be able to pay the mortgage + H2B interest when it kicks in and we'd still be paying less than I pay now in rent! The main thing about this property is that it's a H2B HOUSE in the same area we've been renting for many years now. These are hard to come by I belive. What I still need to wrap my head around is the whole "staircasing" bit. But I believe that if worst comes to worst, I would have to sell it in 5 - 10 years. The property has potential for increase in value I believe, due to its spec and location. And even in the case of me not buying any extra "shares" in the property, if I understand the housing ladder correctly, that would mean we'd be in a better position to move into an outright purchase, correct? My plan is to get a surveyor just to make sure the price is adequate, does that make sense?
What you’re saying makes a lot of sense. The only reason I can see someone needing to move is if they can’t pay the interest on the loan, or if they couldn’t pay it back after 25 years (which I think is unlikely). A house is generally a better investment than a flat, so well done for that! Do your homework as well and try not to pay over the odds. If you want to understand the repayment process better, check out this video ruclips.net/video/Qz-q8KdrZHg/видео.html
@@SelfInvested Great stuff! Thanks a lot. I'll watch that video carefully. A lot of things need to converge to make this happen, but at least I see a light at the end of the tunnel! 😁
Thanks Lemuel, your videos' are super helpful. A question that keeps coming up in my search with Help to Buy is 'how easy is it to remortgage after year 5?', when you start getting charged interest on the equity loan. Any help or direction to a previous video where you explain it would be great! Cheers
Hey Chris! Thanks for the comment. If you're asking how easy it is remortgage after 5 years when you start paying interest, then I think it is straight forward - the interest payments will affect your affordability, but because you're only paying interest on the loan it shouldn't be too major. You can check out this video where I talk to a mortgage advisor about the scheme: ruclips.net/video/wRz_1S9MAUY/видео.html - you can also speak to him directly for free - his contact details are in the description of that video. If you're asking how easy it is to remortgage after 5 years and repay the loan, then I think that's a lot harder - depending on how big a loan you borrowed.
Thank you Chika 🙏🏿 Here you go: www.which.co.uk/news/2020/06/exclusive-one-in-seven-help-to-buy-homes-lose-value-despite-local-house-prices-soaring/ I’ll add the link to the description as well
You are very welcome, brother! Glad you found it useful. Could you tell from the title and thumbnail what to expect or was the content of the video a surprise?
Great video. Unfortunately in order to get the house size we desire in our area of Bristol (unless we'd like to get a house which needs a lot of work, so more money needed to renovate)myself and my husband will be using one of these schemes. They do work out very expensive by the looks of it but ultimately being on the property ladder is still better than renting wouldn't you agree? Also we were told you only need a 5% deposit for shared ownership and htb, is that correct? Mang thanks.
Thank you, Rox. Yes, I think you can buy a shared Ownership home with a 5%. I used 10% in the example for a similar comparison. I think the schemes can be better than renting, especially if you go for a house, but I also don’t think renting is all bad. If I was to buy with one of these schemes, I would focus on buying well - good property, good location, good price, etc. and do some number crunching to make sure it’s worth it. Which scheme are you more likely to go for?
This was an excellent video, thanks for the effort and explaining so clearly. I've been watching videos like this for over a year, and found your channel a couple of weeks ago, you do good research and explain it clearly. I think one of the facts that most videos ignore is the point you highlighted about how the h2b properties are normally overpriced. Hopefully they open h2b to used properties this year, do you think is feasible? I think it would change the housing market completely.
Thank you Andres, I appreciate the feedback 🙏🏿 Help to Buy will only be for new builds, unfortunately. I think the main beneficiaries of the scheme are the developers. If the scheme’s primary focus was to help people get on the property ladder, then you’d be able to use the loan on existing builds as well as new builds
Let's say you have your lower mortgate on H2B propery and your not making any repayments on the loan that government lent you that's fine. The problem starts after 5 years if that same property that you bough for 400k is worth 500k now so the amount you have borrowed automatically grows so if you borrowed 220k you paying back 260k. Also the prices of H2B are higher than shared ownership because they are sold at the premium price. Where with Shared ownership if Value of property grows , your actual shares are growing also. Yes your rent will be higher but this is not the scheme to keep for any longer than 5-10 years. Of course it's designed to make it almost not possible for owner to staircase to 100%. It would be good way to get on property larder and use your equity that you have paid over the years. Let's say your share was 260k and in 5 years price of property has gone up 15% which is very likely as of properties in UK double in price on average every 15 years. So in 5 years just on this you could make 39k plus equity let's say another 15-30k. It's a quick maths. H2B your not allowed to sell it until that equity loan is given back to government. Which is the part that will never make me sign up for one. Unless government will make sure that loan repayment will be based of the original price of purchase. Not the price that they will evaluate after 5 years. H2B is more expensive than renting where Shared ownership is not.
I'm not sure the H2B scheme works in the way that you have described. Firstly, the interest paid on a H2B increases with inflation. As far as I understand, the government doesn't revalue your home to increase the interest rate - so even if the value of your home increase to £500k, from £400k, the interest you pay will be based on what you bought it for, so £400k. The rent for Shared Ownership also increases with inflation, so this is comparable. Secondly, as with Shared Ownership, if the value of your H2B home increases, so does the value of share you own. Thirdly, yes, when you sell your H2B home, you have to repay the loan, but in practice, this works the same as selling a Shared Ownership home. For example, if a shared owner and H2B owner are both sell 100% their homes for £100k, and both own 60% of their homes, they’ll both receive £60k and £40k would go to the housing association and Homes England (the government), respectively
@@SelfInvested Thanks , I was very misinformed about that part. So after 5 years what you pay back is what government has borrowed you plus the interest ? Do you have to make payments in big chunks or they are monthly payments ?
The only benefit these schemes have are the low deposit requirements. However all the additional costs add up to the same monthly cost if not higher than a regular mortgage property. If its the only route you can take then it's there for people to look into. If you can save up a few more years then opt to go for a regular mortgage route.
Yeah, I’d prefer to use neither tbh. But based on what I can understand, I think H2B is a better deal if you can buy at a reasonable price
Great vid never thought about it this way. 😦 These schemes should be renamed 'HELP TO SELL'.
Haha! Yes, indeed! The H2B scheme has definitely benefitted the developers!!
I'm literally making this decision tomorrow! Thanks for the video, I think the help to buy scheme is the better choice for me. Just they're harder to find I feel. Shared ownership places seem to be easier to find or have more variety. I'm going solo for this so I want to be safe with money each month and not struggle.
You’re welcome. Hope this video helped you make an informed decision. Thanks for watching!
@@SelfInvested with what budget my bank they have offered me for my mortgage and me living in London, seems the shared ownership route is the way for me. Which kinda sucks but like you said both schemes have their pro's and cons
I'm 17 and you have made this easier to understand. Thank you!
No problem, you’re welcome! Thank you for leaving a comment!!
Great video Lemuel! I’m finding these extremely helpful 👏🏾👏🏾👏🏾
It's a pleasure Christie 🙏🏿 I'm glad you find them useful!
Great example at the beginning, thanks for turning the theory into practical
Thanks for this video! Very interesting seeing a side by side comparison of the 2 schemes. As a sole purchaser I've always viewed Shared Ownership as the cheaper option given that I can purchase as little as 25% with the option for staircasing later...
I'm glad you found it interesting. I think Shared Ownership is more accessible because the smallest share you can buy is 25%, whereas with H2B, it's 60% (if you get a 40% loan in London). Also, the full market price of properties under Shared Ownership tends to be lower. However, generally speaking, all things being equal, as shown in the example, the H2B loan comes out cheaper.
Also, just to say, staircasing is not the cheapest way to buy a property outright. Generally speaking, it's more expensive than buying a property outright. In reality, most shared owners will not be able to staircase to 100%. For shared owners that want to own their home outright, the best most can hope for is that the value of their home increases enough so that they can sell and buy a cheaper property outright.
@@SelfInvested yes I hear you, totally. For me I don't intend to staircase, the plan is shared ownership for 3-5 years then sell my share and move on to buy outright... one just hopes that a profit can be made at the point of sale! The figures I'm looking at work out cheaper than paying rent for a property of the same standard. I think if I was looking for something long term and couldn't afford a deposit outright I'd be looking more a H2B.
Thanks for determining the differences which is valuable info 👍🏽
Both schemes seem unaffordable to those trying to get on the ladder which is exaggerating the housing crisis i feel🤔
My pleasure 😉 Tbh H2B is not considered an affordable housing product, but Shared Ownership is - so it’s funny how the monthly cost for H2B can workout cheaper than Shared Ownership!
Very educational. You explained it clearly and it was easy to understand :) Keep up the good work !
Thanks, Veronica! Glad you found it useful :)
How do you pay the 40% equity loan back on the help to buy scheme
Great video as always I am just praying VRTB is going ahead because that sounds like the only viable option here
I appreciate the love as always 🙏🏿 VRTB will be a great opportunity if you can take advantage of it!
Sorry what is VRTB?
@@rayhan15243 Haha! Voluntary Right to Buy - a scheme that extends major Right to Buy discounts to social housing tenants
One of the best explanations I have seen on youtube so far, thank you! I have a question on the Help to Buy selling process, would I need to repay the whole loan before selling the property, a bit like having to complete the staircasing in the shared ownership case? Thanks!
Only one of the best?! 😉 When you sell your HTB home, you need to repay the loan. From my understanding, this is done as part of the selling process - as in it doesn’t need to be done as a completely separate exercise before starting the selling process. With shared ownership, the housing provider usually tries to sell your share in the first instance. If this process is unsuccessful, then you can usually sell 100% on the open market and the ownership is staircased up to 100% as part of the selling process.
@@SelfInvested When the house buyers ownership is staircased up, do they have to make an outright payment? or is this paid for through the selling process?
Hey there! If I understand you correctly, you can staircase your ownership without selling, but you have to pay for it at the time you staircase - typically by remortgaging to borrow more money to repay it
Another great video Lemuel and many thanks! You are getting more popular and wish you luck indeed!
I have been searching for this type of a comparison video to see which one would suit better.
Now you justify me HTB is better at least if you want to buy and sell it within a 5-10 years time period plus saving some money unless you staircase the property.
You're welcome! My preference would be Help to Buy as well. I might change the name of this video to Help to Buy vs Shared Ownership, so it's clearer what the video is about...
I've only just come across your videos Lemuel and they are so interesting and helpful!! Thank you. I think now shared ownership and the help to buy scheme aren't for me 😂. I think I'll just be buying a house/flat outright as it appears it's much less stressful and less expensive :-)
You are very welcome! These schemes do work for people, but they wouldn’t be my Plan A. If I had to choose between the two, I think H2B would be my preference...
@@SelfInvested Oh ok, thanks for that advice! Really really helpful. I can afford to save up for a deposit to buy outright though even if its not quite in the area I want to live in. I don't mind living a few miles away.
@@lucydawkins4552 I would choose to move further out as well!
@@SelfInvested Thank you for all these replies 😅. You don't need to reply to the next one if you too busy though lol, as I know your a busy man and I'm messaging you a lot. Yes, I feel that it's maybe best to stick to what you know regarding this. It appears to be so much simpler to just buy a blinking house outright without all this shared ownership/help to buy nonsense 🤣. Actually, I am really lucky that I can afford to save up for a deposit and I earn enough to be able to get a mortgage 😊.
@@lucydawkins4552 Haha! Please don’t worry! If you have a question, then ask. I try to respond to all the comments. I just appreciate people watching these videos because I put a lot of effort into them, and it the easiest way I can show my gratitude :)
Im a first time buyer what’s currently come across a shared ownership 1 bedroom flat at 25% shared ownership costing 72 thousand I just wanted to ask for example if I was to take up this option near down the future once that was paid of would that me be Scot free or would I then be required to pay a deposit just wondering since the lease is almost 120 years remaining
Hi Sharon 👋🏿 not sure I understand the question. Are you asking whether you’ll need a deposit of you want to staircase in the future?
Hi Lemuel. Looking into H2B and found your channel very helpful. Thanks for all the advice. One question from this video, what sort of permision is needed from the H2B scheme for extensions, etc? Looking at a 2 bed house with H2B in Brixton/Streatham. It has a roof terrace and is marketed as a property with potential for 3rd bedroom (STP). As I have 2 kids, that sounds really promising. Indeed it is at the very top range of H2B, so I am a bit weary of punching above my weight. But I reckon anything is better than the 2k rent I pay every month for many years now. My understanding is that even with 330k mortgage, the repayments would be nearly half of my current rent. And it's a house, so no service charge.
Indeed, as some have said, one would rather save for longer and not rely on this scheme. But so far I found that if a first time buyer (who does not earn over 100K a year) wants a decent family property with 2 toilets within London's zone 2 (even 3), H2B is the only way. Unless one has over 100k in savings or something like that.
Maybe that's a bit too much information 😁, I know. But what do you reckon?
Thank you Felipe for the feedback. I'm glad you find the videos helpful! Please ask anything you wish!!
In terms of permission, as I understand it, you'd need to get consent from the people that managing the H2B scheme in your area.
The equity loan is linked to the value of your home. So, if you make structural alterations without permission and it increases the value of your home, the equity loan amount you owe will increase.
However, if get permission to make structural alterations
and the value of your home increases, they may
ignore the value of that alteration when they work out how much you owe on your equity loan.
BUT make sure you check this with the people managing your H2B loan!!
I can't give you 'advice' because I'm not qualified or insured to, and even then, I'd need to understand your situation better. But personally, I potentially would look at an existing older house further out, which is cheaper and I could buy outright - but TBH, what you described doesn't sound bad! I think I'd be interested in that house in a similar situation. If I did go for it, I'd make sure I could afford the interest when it kicked it and for the foreseeable future! Also, I make sure I had a plan for selling if I needed to in the future...
@@SelfInvested Thanks again Lemuel, regarding the structural alterations that now makes sense. I'll look further into it. As far as looking for a property further out, I did think about it but we are not willing to do so due to our jobs and the fact that, ideally, we'd like to keep the kids in the same school/circle of friends. That in my opinion is worth a lot, especially when considering the commuting costs we'd incur on a daily basis. As far as affording the interest, I'm quite confident that this would not be an issue. Given the breakdown I've been given by my mortgage adviser, I'm sure we'd be able to pay the mortgage + H2B interest when it kicks in and we'd still be paying less than I pay now in rent! The main thing about this property is that it's a H2B HOUSE in the same area we've been renting for many years now. These are hard to come by I belive. What I still need to wrap my head around is the whole "staircasing" bit. But I believe that if worst comes to worst, I would have to sell it in 5 - 10 years. The property has potential for increase in value I believe, due to its spec and location. And even in the case of me not buying any extra "shares" in the property, if I understand the housing ladder correctly, that would mean we'd be in a better position to move into an outright purchase, correct? My plan is to get a surveyor just to make sure the price is adequate, does that make sense?
What you’re saying makes a lot of sense. The only reason I can see someone needing to move is if they can’t pay the interest on the loan, or if they couldn’t pay it back after 25 years (which I think is unlikely). A house is generally a better investment than a flat, so well done for that! Do your homework as well and try not to pay over the odds. If you want to understand the repayment process better, check out this video ruclips.net/video/Qz-q8KdrZHg/видео.html
@@SelfInvested Great stuff! Thanks a lot. I'll watch that video carefully. A lot of things need to converge to make this happen, but at least I see a light at the end of the tunnel! 😁
Thanks Lemuel, your videos' are super helpful. A question that keeps coming up in my search with Help to Buy is 'how easy is it to remortgage after year 5?', when you start getting charged interest on the equity loan. Any help or direction to a previous video where you explain it would be great! Cheers
Hey Chris! Thanks for the comment. If you're asking how easy it is remortgage after 5 years when you start paying interest, then I think it is straight forward - the interest payments will affect your affordability, but because you're only paying interest on the loan it shouldn't be too major. You can check out this video where I talk to a mortgage advisor about the scheme: ruclips.net/video/wRz_1S9MAUY/видео.html - you can also speak to him directly for free - his contact details are in the description of that video.
If you're asking how easy it is to remortgage after 5 years and repay the loan, then I think that's a lot harder - depending on how big a loan you borrowed.
@@SelfInvested perfect, thanks for your help!
my pleasure!
Great video. Please can you share a link to the article in 11:26
Thank you Chika 🙏🏿
Here you go: www.which.co.uk/news/2020/06/exclusive-one-in-seven-help-to-buy-homes-lose-value-despite-local-house-prices-soaring/
I’ll add the link to the description as well
Great video cover! And 1500+ subscribers, you are growing fast! Yaay!
Thank you Iryna 😉 I know, right?! 💪🏿
This is sooooooooooooooooooooooo helpful Lemuel. Much appreciated...I've learnt so much
You are very welcome, brother! Glad you found it useful. Could you tell from the title and thumbnail what to expect or was the content of the video a surprise?
Thanks for the video 👍
Your are so good at explaining!!🏆
You’re welcome, Daniel. I’m glad you think so, thank you 👍🏿
Does the housing association ask for a reference from previous landlord
Tbh, I’m not sure. It’s worth asking a housing association directly…
Interesting information. Thank you
Great video. Unfortunately in order to get the house size we desire in our area of Bristol (unless we'd like to get a house which needs a lot of work, so more money needed to renovate)myself and my husband will be using one of these schemes. They do work out very expensive by the looks of it but ultimately being on the property ladder is still better than renting wouldn't you agree? Also we were told you only need a 5% deposit for shared ownership and htb, is that correct? Mang thanks.
Thank you, Rox. Yes, I think you can buy a shared Ownership home with a 5%. I used 10% in the example for a similar comparison. I think the schemes can be better than renting, especially if you go for a house, but I also don’t think renting is all bad. If I was to buy with one of these schemes, I would focus on buying well - good property, good location, good price, etc. and do some number crunching to make sure it’s worth it. Which scheme are you more likely to go for?
This was an excellent video, thanks for the effort and explaining so clearly. I've been watching videos like this for over a year, and found your channel a couple of weeks ago, you do good research and explain it clearly. I think one of the facts that most videos ignore is the point you highlighted about how the h2b properties are normally overpriced. Hopefully they open h2b to used properties this year, do you think is feasible? I think it would change the housing market completely.
Thank you Andres, I appreciate the feedback 🙏🏿 Help to Buy will only be for new builds, unfortunately. I think the main beneficiaries of the scheme are the developers. If the scheme’s primary focus was to help people get on the property ladder, then you’d be able to use the loan on existing builds as well as new builds
Let's say you have your lower mortgate on H2B propery and your not making any repayments on the loan that government lent you that's fine. The problem starts after 5 years if that same property that you bough for 400k is worth 500k now so the amount you have borrowed automatically grows so if you borrowed 220k you paying back 260k. Also the prices of H2B are higher than shared ownership because they are sold at the premium price. Where with Shared ownership if Value of property grows , your actual shares are growing also. Yes your rent will be higher but this is not the scheme to keep for any longer than 5-10 years. Of course it's designed to make it almost not possible for owner to staircase to 100%. It would be good way to get on property larder and use your equity that you have paid over the years. Let's say your share was 260k and in 5 years price of property has gone up 15% which is very likely as of properties in UK double in price on average every 15 years. So in 5 years just on this you could make 39k plus equity let's say another 15-30k. It's a quick maths. H2B your not allowed to sell it until that equity loan is given back to government. Which is the part that will never make me sign up for one. Unless government will make sure that loan repayment will be based of the original price of purchase. Not the price that they will evaluate after 5 years. H2B is more expensive than renting where Shared ownership is not.
I'm not sure the H2B scheme works in the way that you have described. Firstly, the interest paid on a H2B increases with inflation. As far as I understand, the government doesn't revalue your home to increase the interest rate - so even if the value of your home increase to £500k, from £400k, the interest you pay will be based on what you bought it for, so £400k. The rent for Shared Ownership also increases with inflation, so this is comparable.
Secondly, as with Shared Ownership, if the value of your H2B home increases, so does the value of share you own.
Thirdly, yes, when you sell your H2B home, you have to repay the loan, but in practice, this works the same as selling a Shared Ownership home. For example, if a shared owner and H2B owner are both sell 100% their homes for £100k, and both own 60% of their homes, they’ll both receive £60k and £40k would go to the housing association and Homes England (the government), respectively
@@SelfInvested Thanks , I was very misinformed about that part. So after 5 years what you pay back is what government has borrowed you plus the interest ? Do you have to make payments in big chunks or they are monthly payments ?
@@Donkey1994 After 5 years, you only pay the interest, not repayments. The repayment process is similar to staircasing
Ive got a question, can 2 brothers buy a share ownership house, or is this just design for couples and a single person?
I think you can, but check with the Money Advice Service: webchat.moneyhelper.org.uk/newchat/chat.aspx?domain=www.moneyhelper.org.uk
Very well explained, thank you!
You're very welcome! Thank you for watching! Could you tell from the title and thumbnail what to expect from the video or was it a bit of a surprise?
so which one you think is best?
What’s ‘best’ depends on your personal situation, but my preference would be the H2B loan scheme… I think it’s more generous
@@SelfInvested H2B?
Help to Buy
Very informative thanx👍🏽
You’re welcome! Thank you for watching!
Thanks , that’s a great help!
You’re welcome! Glad you found it useful! This is one of my favourite videos :)
Another informative video. Thank you!
You're welcome, Kay! Thank you leaving a comment 🙏🏿