Tradefair & Financials
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16 May 10
02:05
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Date Joined:
08 Nov 08
A friend of mine is considering purchasing an apartment under this scheme. I had never heard of it until now and just spent an hour or two reading up on it on the MSE boards.
Some bits of it seem bad but I feel like I'm still trying to clearly identify the main 'catch' with this program. My friend and his girlfriend are not big earners and there's no possible way they'd be earning anywhere near enough to pay back both the mortgage and the equity loan. So it seems if they did do this plan the smartest thing they could do is sell in 5 years.
Let's imagine they buy an apartment for the overvalued price of 120k (5k deposit, 79k mortgage, 36k equity loan), and that in 5 years it's worth 110k. Once they pay the fees and repay everything they'd be left with very little to show for 5 years of paying a mortgage, yeah?
Anyway I'd love to hear some comments, I live with my parents and have little idea how mortgages etc work, but I don't want my friend to make a big mistake.
Thanks, much appreciated.
Some bits of it seem bad but I feel like I'm still trying to clearly identify the main 'catch' with this program. My friend and his girlfriend are not big earners and there's no possible way they'd be earning anywhere near enough to pay back both the mortgage and the equity loan. So it seems if they did do this plan the smartest thing they could do is sell in 5 years.
Let's imagine they buy an apartment for the overvalued price of 120k (5k deposit, 79k mortgage, 36k equity loan), and that in 5 years it's worth 110k. Once they pay the fees and repay everything they'd be left with very little to show for 5 years of paying a mortgage, yeah?
Anyway I'd love to hear some comments, I live with my parents and have little idea how mortgages etc work, but I don't want my friend to make a big mistake.
Thanks, much appreciated.
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Buying anything overvalued is not a good start.
There is no guarantee that they'll be able to sell for
£110K,even in 5 years time.
Why couldn't they afford the repayments?
£120K doesn't seem a lot for a "key worker"
and working partner.
Being a government scheme for key workers you
wouldn't expect any "catch".
There is no guarantee that they'll be able to sell for
£110K,even in 5 years time.
Why couldn't they afford the repayments?
£120K doesn't seem a lot for a "key worker"
and working partner.
Being a government scheme for key workers you
wouldn't expect any "catch".
Smartest thing to sell in five years? They'll be very lucky if the property is worth what they paid for it.
In 5 years it'll be worth £500k. Welcome to inflation boys!
yeah i guess i rescind that statement re : 5 years. i just said that because the fees kick in after 5 years.
this couple don't earn a lot and likely never will, so things will probably be tight just paying the mortgage and bills. they will never ever save up the money to repay the 30%, so at some point in the next 20-25 years they will have to sell.
also, since i started this thread i have realised that they are not going to listen to my opinion anyway.
this couple don't earn a lot and likely never will, so things will probably be tight just paying the mortgage and bills. they will never ever save up the money to repay the 30%, so at some point in the next 20-25 years they will have to sell.
also, since i started this thread i have realised that they are not going to listen to my opinion anyway.
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