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  • FIRST POST
    • Emma_Louise
    • By Emma_Louise 14th Mar 17, 6:14 PM
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    Emma_Louise
    Best ways to pay off Help 2 Buy equity loans?
    • #1
    • 14th Mar 17, 6:14 PM
    Best ways to pay off Help 2 Buy equity loans? 14th Mar 17 at 6:14 PM
    My husband and I bought a home last July using the Help 2 Buy equity scheme, but I wondered how the bet way of paying it off is?

    Our fixed rate mortgage was for a 2 year period, so at the end of this time, it' likely we will want to remortgage - is this even possible with the equity loan? Could we remortgage for a higher amount and use the excess to pay off the equity loan?

    It's likely this won't be our 'forever home', so maybe the best option is to wait until we are ready to sell, and pay it off then? The only problem with this is that we have some plans to improve the property, which would hopefully put the value up, but in turn the equity loan repayment will go up.

    I'm so confused and really don't know the best way to go about it. Any advice would be greatly appreciated!
Page 1
    • dimbo61
    • By dimbo61 14th Mar 17, 6:33 PM
    • 9,754 Posts
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    dimbo61
    • #2
    • 14th Mar 17, 6:33 PM
    • #2
    • 14th Mar 17, 6:33 PM
    The best way is to overpay every month.
    The more you can pay off the mortgage which you are paying interest on the better.
    • Emma_Louise
    • By Emma_Louise 14th Mar 17, 6:46 PM
    • 2 Posts
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    Emma_Louise
    • #3
    • 14th Mar 17, 6:46 PM
    • #3
    • 14th Mar 17, 6:46 PM
    The best way is to overpay every month.
    The more you can pay off the mortgage which you are paying interest on the better.
    Originally posted by dimbo61
    This doesn't help pay off the equity loan though as that isn't included in the mortgage payments and to pay off early the minimum you can pay is 10% each time. I'm fine with the mortgage payments and understand how to pay off the mortgage sooner, it's the equity loan that I'm not sure what our best option is
    • Futuristic
    • By Futuristic 14th Mar 17, 8:30 PM
    • 726 Posts
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    Futuristic
    • #4
    • 14th Mar 17, 8:30 PM
    • #4
    • 14th Mar 17, 8:30 PM
    Yes you can remortgage if you have help to buy equity loan but the amount of lenders which offer HTB remortgaging is very little so probably best to use broker to get best rate.

    Here's a good article on remortgaging htb and remortgaging to pay off equity loan:
    https://www.homewardlegal.co.uk/blog/how-remortgage-help-buy-equity-loan
    • alex_163163
    • By alex_163163 14th Mar 17, 10:21 PM
    • 230 Posts
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    alex_163163
    • #5
    • 14th Mar 17, 10:21 PM
    • #5
    • 14th Mar 17, 10:21 PM
    Have you checked the HTB website FAQs yet? Don't know how much work you plan to do to the current property but this might affect your plans...... however if the work is just decoration and new kitchen/ bathroom then I think you'd be allowed to do this without permission.

    Can I extend or alter the property?
    Not without permission. Because Help to Buy is designed to help people move on to or up the housing ladder, you should consider repaying part or all of the Homes and Communities Agency!!!8217;s contribution before making plans for improvements or alterations. This is because the Agency is seeking to help future aspiring buyers and may use the proceeds of these repayments to make more assistance available. Therefore, consent will not usually be granted for significant home improvements. The Post Sales Help to Buy Agent will act reasonably in considering any application and will review cases of hardship if, for example, property modifications are required for a disability.

    When your property is sold in the future, if improvements have been made with the approval of the Post Sales Help to Buy Agent, these will be ignored when your property is valued to work out how much should be repaid to the Agency.

    - See more at: https://www.helptobuy.gov.uk/equity-loan/faq/#sthash.h1Cuo7BT.dpuf


    when you come to remortgage you also have to get permission from HTB to do so, at a fee! Have a read of the HTB FAQ page if you haven't already. Might help answer some questions for you.
    • alex_163163
    • By alex_163163 14th Mar 17, 10:27 PM
    • 230 Posts
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    alex_163163
    • #6
    • 14th Mar 17, 10:27 PM
    • #6
    • 14th Mar 17, 10:27 PM
    http://www.myfirsthome.org.uk

    This is also a helpful website for HTB queries. There is a tarif of charges page that outlines the fees charged by the HTB company for remortgage, staircasing the loan etc.
    • kingstreet
    • By kingstreet 15th Mar 17, 5:45 AM
    • 32,922 Posts
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    kingstreet
    • #7
    • 15th Mar 17, 5:45 AM
    • #7
    • 15th Mar 17, 5:45 AM
    Yes you can remortgage if you have help to buy equity loan but the amount of lenders which offer HTB remortgaging is very little so probably best to use broker to get best rate.

    Here's a good article on remortgaging htb and remortgaging to pay off equity loan:
    https://www.homewardlegal.co.uk/blog/how-remortgage-help-buy-equity-loan
    Originally posted by Futuristic
    The number of lenders accepting remortgages with the HTB loan continuing is small. There is a much larger number which accept applications to repay the HTB loan.

    OP - yes, you can remortgage and repay the loan and as dimbo has suggested, if you overpay your mortgage you are increasing the amount of equity you have in the property which will help you get a lower loan to value and better rate when you do.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • dimbo61
    • By dimbo61 17th Mar 17, 12:38 PM
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    dimbo61
    • #8
    • 17th Mar 17, 12:38 PM
    • #8
    • 17th Mar 17, 12:38 PM
    As Kingstreet has already pointed out you have two loans !
    One is a Mortgage which you pay interest on and the other is Interest Free for the first five years.
    So if you can overpay your mortgage by £500/£1,000 a month for the next 4 years you will be building up more equity in your home.
    With luck your property might go up in value as well.
    What you hope to achieve is a LTV of 80/75% at the end of the Interest free period so you can remortgage the property and incorporate the HTB loan into your main mortgage.
    Easy for me to say but it takes carefully planning and being as MSE as possible.
    We halved our mortgage in 4 years by offsetting and overpayments
    Last edited by dimbo61; 17-03-2017 at 9:36 PM.
    • silvercar
    • By silvercar 17th Mar 17, 3:26 PM
    • 36,713 Posts
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    silvercar
    • #9
    • 17th Mar 17, 3:26 PM
    • #9
    • 17th Mar 17, 3:26 PM
    May be safer to save up the money and use it to repay the HTB loan after 5 years. Otherwise you will be paying hefty interest on that loan. Will save you more in the long term than reducing the mortgage now and having a high interest HTB loan in 5 years time.
    • dimbo61
    • By dimbo61 17th Mar 17, 9:47 PM
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    dimbo61
    Interest on the HTB loan is for me the big worry.
    It is Interest Free for the first five years of owning your home but then you start paying Interest.
    This could be more or less than the interest you are paying on the mortgage for the other 75%
    In 5 years time you want to put yourself in the best possible position so overpay the expensive part of the loan first !
    • moneytorques
    • By moneytorques 16th Jan 18, 1:52 PM
    • 108 Posts
    • 39 Thanks
    moneytorques
    Help to Buy Improvements
    Hi there, just came across your thread from last year, I too am interested in the option of some improvements so was wondering if youd followed through with your own successfully with the sanction of Help to Buy?

    Thanks
    • Stuey2307
    • By Stuey2307 22nd Jan 18, 10:01 AM
    • 7 Posts
    • 1 Thanks
    Stuey2307
    Hi, this thread seemed like the most appropriate place to start!!!8230; I would like to know if anyone has successfully paid off their Help to Buy loan either by saving up, remortgaging, borrowing more on their mortgage or selling their first home?

    My wife and I are currently in year 4 of our HTB loan, as explained above, its interest free for the first 5 years rising to 1.75% in year six, 2.75% in year seven, 3.75% in year eight and so on!!!8230;

    The value of our property now is approximately £200k, we have £120k outstanding on our mortgage and owe 20% of the value of the property on our HTB loan (so approx. £40k). We would ideally like to remortgage the HTB loan in year 6 or 7 to prevent the interest rate from creeping up. Alternatively, we could save and pay it off in x2 10% chunks (so two payments of £20k), but it would be an awful lot easier to consolidate it with our main mortgage.

    I've not yet come across anyone on the forums that have obtained an advance on their mortgage or remortgaged to pay off their HTB loan, I understand a few limited lenders offer this service. Our mortgage is with nationwide, has anyone obtained a further advance from them to pay off HTB?

    Any advice/ experience would be gratefully received!
    • kingstreet
    • By kingstreet 22nd Jan 18, 10:10 AM
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    kingstreet
    1.75% in year six, 2.75% in year seven, 3.75% in year eight and so on…
    Originally posted by Stuey2307
    That isn't the case.

    If you assume inflation runs at 5% per annum, it's 1.75% in year six, 1.86% in year seven, 1.97% in year eight and so on.

    You may wish to look at your personal worked example from the HTB Agent when your ATP was issued, or the HTB Buyer's Guide, page 18;-

    https://www.helptobuy.gov.uk/wp-content/uploads/Help-to-Buy-Buyers-Guide-oct-16-V1016.pdf
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • sliyk
    • By sliyk 13th Feb 18, 3:47 PM
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    sliyk
    I am very much intrigued by all the points of view where.
    We recently bought a 370k house with 5 percent deposit and 20 percent HTB. The HTB loan is approx 75k. A saving of approx 1200 quid a month and we have enough at the end of the 5 year to pay off most if not all of it.
    On the other hand people have written here that overpay on the mortgage and then apply to remortgage to have the HTB paid off in full at the end of 5 years?
    I am unsure as to which one would be better for us.
    • kingstreet
    • By kingstreet 13th Feb 18, 4:01 PM
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    kingstreet
    There is no right or wrong answer.

    No-one knows what is going to happen to property prices so there is no way of knowing the amount needed to redeem the loan past the end of year five.

    If you build up a savings buffer, or overpay your mortgage you are creating the ability to deal with the loan in some way at some point in the future.

    Doing nothing shouldn't be the answer. Thinking of an exit route is the right thing to do.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • sliyk
    • By sliyk 13th Feb 18, 4:06 PM
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    sliyk
    That's what we are doing. Putting a substantial amount away every month. Just wanted to know what would be better, saving it to pay off HTB or to overpay on the mortgage. Definitely NOT not doing anything.
    • kingstreet
    • By kingstreet 13th Feb 18, 4:09 PM
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    kingstreet
    The last bit was aimed at future readers, not you.

    Hence, no quote.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • dimbo61
    • By dimbo61 13th Feb 18, 4:17 PM
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    dimbo61
    So what is the rate you are getting on your savings ?
    What is the rate you are paying on your mortgage ?
    Now we have just had a 5% regular saver with Nationwide GREAT
    However you can only save £500 (each) for 12 months and the money earns 2.5% over the 12 months so is your mortgage rate more ?
    After 12 months you can only invest £250 a month ( each ).
    To all the people on HTB please overpay the mortgage every month.
    Other people will talk about Stocks and shares ISA,s and other investment but that maybe a big gamble with your HOME
    • amnblog
    • By amnblog 14th Feb 18, 8:02 AM
    • 10,289 Posts
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    amnblog
    Is the OP saying they bought a new home in July 2016 and in January 2017 they 'we have some plans to improve the property, which would hopefully put the value up'?

    How do you 'improve' a property 'straight out of the box', and if you can, can you do it with without affecting the guarantee.

    If you can, why would you do that when you only owe 80% of it.

    Someone is bonkers here - perhaps it's me.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • sliyk
    • By sliyk 14th Feb 18, 8:07 AM
    • 7 Posts
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    sliyk
    The rate we got for the mortgage was 1.49 percent fixed for 2.5 years, resulting in repayments of £851 per month. Our savings are not accumulating interest (personal reason not to do so).
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