Isn't the help to buy scheme...

I had thought this wasn't right but its only now I'm looking into the option of help to buy that I can say its BS.

Its a fee of 1.75% from year five which rises with RPI plus 1% interest.

From .gov.uk:
'In the 6th year, you’ll be charged a fee of 1.75% of the loan’s value. After this, the fee will increase every year. The increase is worked out by using the Retail Prices Index plus 1%.'

So in year five it would be 1.75%. If RPI was 10%, in year six it would be 1.94% ie (1/75*1.11)

If RPI stayed at 10% in year seven it would be 2.16% ie ((1.94*1.11)

Could be either your way or my way.
I'm going to ring a bank and find out.
But thing is its dependent on inflation.

Now we have like 900% debt to GDP in this country. We are in the same state as Japan. If our bond-holders demand more interest we are screwed. Interest rates have been at all time lows for 30 years. If we have to pay 1% extra that is like our debt payments doubling.

If your thinking of buying a house I wouldn't use help to buy.

Could be either your way or my way.
I'm going to ring a bank and find out.
But thing is its dependent on inflation.

Now we have like 900% debt to GDP in this country. We are in the same state as Japan. If our bond-holders demand more interest we are screwed. Interest rates have been at all time lows for 30 years. If we have to pay 1% extra that is like our debt payments doubling.

If your thinking of buying a house I wouldn't use help to buy.

You need to bear in mind that this is split between government, business and household.

Government debt right now is not a problem so long as the deficit continues to reduce (because with no deficit, debt will begin to reduce). Businesses and households have deleveraged quite a bit so the rate of increase has slowed.

Please do. Let us know.

I've googled for a worked example, so if you find I'm wrong then let the Daily Fail know:

http://www.thisismoney.co.uk/money/mortgageshome/article-2398896/How-Help-Buy-works-worth-considering-NewBuy-instead.html

'This is interest–free for the first five years, but after that there is a yearly loan fee of 1.75 per cent, rising by the change in the retail prices index plus 1 per cent each year.

For example, if the retail prices index is 5 per cent, in the second year after the end of the interest -free period, or the seventh year of living in your Help to Buy home, the interest repayment on the loan would increase by 6 per cent, from 1.75 per cent to 1.86 per cent.'

Its dependent on inflation but would need inflation to be at 25% for five years for the rate to break 5% (following the 5 year interest free period). If that were to happen I'd have bigger things to worry about.

I probably won't just want to check it out to discount it.

Who has debt at 1% (and hence would see it double if there was a 1% increase)? The low of the 10yr gilt was 1.48% and I think the average gilt ratye the Treasury holds is more like 4%. A 1% increase would maintain the average.

I dunno if I am correct but inflation in the 70s sky rocketed past 25%

If you want a mortgage I would take a normal deal because Mark Carney (The Pimp of the central bankers) is going to change the rules on how much LTV is allowed.

This happens in April.

Did you call a bank to check?

Yes it peaked at 28%, It didn't sustain it for five years though!. The decade had a rate of 13%.

Has Carney got the power to do that yet?

Carney told MPs: “In simple terms, it begins with more intensive supervision of mortgage lending, making sure underwriting standards are maintained, so that we do not see a return to more than 100 per cent loan-to-value ratios, that there are appropriate standards on loan to income.

“It can extend all the way to sectoral capital requirements, additional capital, that banks would have to hold against certain types of lending, including mortgages.

“I also think it should be a question of open debate for whether there should be a consideration, if there were a case where there were vulnerabilities in the judgment of the financial policy committee, whether there should be some guidance provided in terms of LTV ratios and loan-to-income ratios. We do not have powers of direction in that regard, but certainly we retain the ability to observe and recommend if necessary.”