Help To Buy repayment rules?

turkeywelder

Hello all,

Long time lurker, first time poster - please be gentle.

Situation:
We're living in rented accommodation, looking to buy in the next 6-12 months and exploring options of what we can afford, how much our deposit gets us etc.

I've been looking into Help To Buy, we have a big enough deposit to not use it, but I like the idea of a 5 years interest free contribution (and it'll take the pressure off our deposit savings, giving us a bit in the pot for emergencies/a new boiler etc.)

So my question is this:

Can we get say, 15% from Help To Buy and repay it within the 5 years interest free, alongside our mortgage payments? Or do we have to wait until year 6? Also, how are the payments structured? Is there a minimum amount every month, or do we just have to chuck a lump sum at it in year 6?

The plan is to repay the help to buy and when that's clear after 5 years, use the money to overpay the mortgage slightly (depending on the mortgage we get)

I've gone through the PDF on the Help To Buy Website but can't find anything on how the repayments are structured.

Any help appreciated folks!

kingstreet

There are no repayments. The equity loan is 20%, 10% or nil and your qualification will be worked out by the HCA HomeBuy Agent for your area when you reserve and submit the reservation and property information form via the builder.

The equity loan is interest-free for five years. From the beginning of year six, you pay a fee of 1.75% of the loan amount. This increases each year in line with RPI + 1%pa. So, if it's 1.75% in year six, it's 1.9% in year seven and so on.

You can repay the loan whenever you want. You can repay in chunks, so that would mean two payments of 10% each on a 20% loan, but you need to bear in mind, it's a percentage of the value of the property at the time, not the £ amount you originally borrowed.

Otherwise, the loan is repaid on sale, or at the end of the 25 years when you will need the means of repayment from your own resources.

turkeywelder

Ahh, I see.

I think we'll go the traditional route then!

Thanks