I am a first time buyer and thinking about buying on the Governments help to buy scheme. I have done some reseach into it and it seems very complicated. Does anyone know what the risks are for purchasing a new build on this scheme?
Hi, thanks for you question as it is a very important one to address. When you speak to a developer it is in their best interests to only provide good news about the scheme as they want to sell you the property. There are big risks when purchasing new build properties on the help to buy scheme that you need to be aware of. The first is that new houses are like new cars, as soon as you purchase them they lose value. The good thing about the Government program is that the equity loan used it linked into the property value, so it if goes down the loan amount will go down. The biggest risk on this scheme comes into play in the 5th year. It is due to the fact that you will need to start paying interest on the loan amount. The amount will only be a small percentage but you will be required to re-mortgage at the same time. There is a big chance that the new mortgage you get will cost more than you are presently paying. If you add the loan repayment ontop of the additional mortgage costs, this could be more than you can afford to pay. So if you are going to use this scheme make sure you borrow an amount that you can comfortable affrod to pay back. It should leave you enough room for when the payments increase. I hope you have found this conveyancing for first time buyers advice helpful and if you have any further questions please let us know.