equity loan help to buy pay off

Phil_Caddy
Phil_Caddy Posts: 7 Forumite
in Loans
right... i need some advise please on a plan i have to see if it's a good idea or not, me and my partner want to buy a house with a help to buy equity loan scheme, house price roughly £200K so our deposit will be £10K and the government will provide us with £40K, so the plan is to save £200 a month for 5 years (the interest free period) to have £12K then remortgage the house for the extra funds needed to go with our £12K to pay the government off, this way we avoid paying interest each month to them and get it paid off sooner to save giving them a lot more money in the long run, would this be a good solution or not? i'd like opinions before committing, thank you! :D
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Comments

  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
    First Anniversary Photogenic Name Dropper First Post
    I ran out of breath about 400 words into the first sentence...
  • Phil_Caddy
    Phil_Caddy Posts: 7 Forumite
    i'd like to add me and my partner need to move out this year so further saving wouldn't be an option otherwise i'd like to save more of the deposit ourselves and avoid using help to buy but the position were in, the help to buy seems a good idea??
  • Phil_Caddy
    Phil_Caddy Posts: 7 Forumite
    Deleted_User wrote: »
    I ran out of breath about 400 words into the first sentence...

    no one is stopping you from taking a breath, there is comma's

    but this doesn't help with my question
  • BrassicWoman
    BrassicWoman Posts: 3,202 Forumite
    First Anniversary Name Dropper First Post Mortgage-free Glee!
    if your plan involves repaying loan with another loan (mortgage) then I do not think you can really afford your plan.

    I would be uncomfortable with less that 15% equity in it myself. so would rent the cheapest room I could find and save harder.
    2021 GC £1365.71/ £2400
  • Phil_Caddy
    Phil_Caddy Posts: 7 Forumite
    BrassicWoman wrote: »
    if your plan involves repaying loan with another loan (mortgage) then I do not think you can really afford your plan.

    I would be uncomfortable with less that 15% equity in it myself. so would rent the cheapest room I could find and save harder.

    thank you for the reply, i can afford it, it's just that by remortgaging i can pay the government off faster to save paying them interest and more money in the future, as the property value increases, surely that makes money sense? i think...
  • Windofchange
    Windofchange Posts: 1,167 Forumite
    First Anniversary First Post Name Dropper
    Assuming of course that your house has gone up in value / stayed static and not crashed in the next 5 years.

    https://www.ftadviser.com/investments/2016/10/04/uk-property-bubble-will-burst-by-2017-warns-economist/

    How confident are you that in your area your house will not be in negative equity, thus meaning you can't re-mortgage it for more money?
  • BrassicWoman
    BrassicWoman Posts: 3,202 Forumite
    First Anniversary Name Dropper First Post Mortgage-free Glee!
    Phil_Caddy wrote: »
    thank you for the reply, i can afford it, it's just that by remortgaging i can pay the government off faster to save paying them interest and more money in the future, as the property value increases, surely that makes money sense? i think...


    You asked for opinions and my opinion is that your deposit is too low to buffer you from future problems. My opinion will not chnge just because you ohrase the question a little differently.

    If house prices do not go up, you will not get a remortgage. We are entering the most unstable time economically this country has known in a century.

    If you lose your job or have to move fast you're stuck in negative equity.

    Save more. Put 15 - 20% down, borrow no more than 3 times the highest salary.
    2021 GC £1365.71/ £2400
  • Phil_Caddy
    Phil_Caddy Posts: 7 Forumite
    thank you for you're replies, i'm by far no genius i just have an idea and wanted opinions, what you have said does make sense to me but time is against me with saving, with help to buy scheme i'll pay more money back the longer i take to pay it back so just thought if a remortgage was possible then paying the government back sooner will save me money in the long run...
  • PeacefulWaters
    PeacefulWaters Posts: 8,495 Forumite
    Phil_Caddy wrote: »
    thank you for you're replies, i'm by far no genius i just have an idea and wanted opinions, what you have said does make sense to me but time is against me with saving, with help to buy scheme i'll pay more money back the longer i take to pay it back so just thought if a remortgage was possible then paying the government back sooner will save me money in the long run...
    Well done on finding the full stop button.
  • mrmagooooooo
    mrmagooooooo Posts: 95 Forumite
    edited 20 April 2017 at 2:29PM
    I have done pretty much exactly the same as you op

    Bought a house for 200k had a 10k deposit and used help to buy and have the same plan, although the HTB will be partially paid with Shares and bonuses so no saving specifically for it. The rest will then be remortgaged.

    I did this around 2 years ago. Granted what people are saying on here is correct. The bubble may burst at any moment. You may also get run over by a bus. You take your own chances so its up to you but I like yourself saw nothing wrong with the plan.

    Hope that helps
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