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Overpay Mortgage or Save for Staircasing
jtjrlm1
Posts: 47 Forumite
Hi All,
Hopefully someone can give me there opinions on the following and which they think is the best option?
Last year I purchased a house under the Homebuyers Direct Scheme, the crooks of the scheme is that you buy 70% of the house with a mortgage, pay a 5% deposit and then 25% of the remaining is loaned to you buy the house builder and the government. You have 5 years interest free and then you start to pay a percentage as rent until you repay the outstanding loan.
After the first year you have the opportunity to staircase in 10% chunks enabling you to buy the outstanding 25% of loan back. Throughout the whole process you are the outright owner of the house.
When you pay the outstanding loan back you pay the market price, so if the house price has increased you end up paying more back, but if its decreased you pay less back.
Which option would you recommend to me, out of the below:
1. Save to staircase and then purchase the 25% back after 5 years?
2. Overpay on the mortgage for 5 years and then re-mortgage for the outstanding 25%
3. Re mortgage now and buy the 25% back
I am comfortable with the current mortgage and am easily saving each month.
Hopefully someone can give me there opinions on the following and which they think is the best option?
Last year I purchased a house under the Homebuyers Direct Scheme, the crooks of the scheme is that you buy 70% of the house with a mortgage, pay a 5% deposit and then 25% of the remaining is loaned to you buy the house builder and the government. You have 5 years interest free and then you start to pay a percentage as rent until you repay the outstanding loan.
After the first year you have the opportunity to staircase in 10% chunks enabling you to buy the outstanding 25% of loan back. Throughout the whole process you are the outright owner of the house.
When you pay the outstanding loan back you pay the market price, so if the house price has increased you end up paying more back, but if its decreased you pay less back.
Which option would you recommend to me, out of the below:
1. Save to staircase and then purchase the 25% back after 5 years?
2. Overpay on the mortgage for 5 years and then re-mortgage for the outstanding 25%
3. Re mortgage now and buy the 25% back
I am comfortable with the current mortgage and am easily saving each month.
0
Comments
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What rate of interest are you paying?0
-
Hi
The rate is currently 4.89 fixed until September 20120 -
I am assuming that the 25% is fixed price and not pegged to the value of the house.
2 is better than 1 because you won't get savings rates as good as your mortgage rate - so by not paying interest on the money you repay, you are gaining on the money by which you overpay.
2 is better than 3 for the 5 years. No point in borrowing the 25% if you can have it interest free.Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam0 -
Hi
Unfortunately the fixed percentage you pay back is market dependant so can go up as well as down0 -
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