Save to buy Vs Help to buy

Homehunter123

Hello,

My wife and I have a combined income of £70k and have a deposit of £13k saved. This gives us the magical 5% deposit on a typical 2 bed house in the areas around London we're looking to buy in (£250 000).

My question is this. We opened a Save to Buy account with Nationwide and have put the deposit plus some additional savings in their each month. We expect we'll be accepted for a mortgage with them at the end of the 6 month period.

Would it be better for us to take out the Save to Buy mortgage with Nationwide or apply for a Help to Buy 2 mortgage from Natwest?

What impact will the future charges on the government loan portion of the mortgage have on the total repayments?

Thanks!

Wallhart

Nationwide lends less but is cheaper.

However saying that if you only have 13k you don't have enough. Legal fees, valuation fees, stamp duty

Based on a 250k property you would need

Deposit 12,500
Stamp duty 2500. If it's 1 pound over this increases to 7,500
Valuation 300 to 500
Legal fees including searched etc approx 1,500


To answer your last question I believe that a percentage of the equity loan is taken into account in your affordability calls but you mortgage does not pay anything off the governments stake. You need to save separately or remortgage house when you've paid some capital off.

kingstreet

There is no Government loan.

You are confusing Equity Loan and Mortgage Guarantee.

Equity Loan only applies when buying a newbuild.

Homehunter123

Apologies, I should have been clearer. We have additional money to cover survey fees and SD etc. the £13K is purely for deposit.

I mean to compare the mortgage guarantee HTB with Nationwide's Save to Buy.

Which is the best offer?

kingstreet

What are the rates and fees of the products you are considering?

If you have time before you can/will apply there may be other HTB - MG lenders/products and Nationwide and others may have revised their 95% rates.

Homehunter123

5 year fixed Help to Buy with Natwest is currently offering us initial rate of 5.49% with £0 product fee.

Nationwide Save to Buy fixed for 5 years offers an initial rate of 6.29%

So at first glance the Help to Buy with Natwest seems the logical choice but are there any other pitfalls with HTB which would make the Nationwide Save to Buy a better option?

kingstreet

No. They are both 95% mortgages. That's it.

There are other 95% products in the market. I counted 13 up and down the country when HTB - MG was launched.

Homehunter123

Great, thanks for the information. I think, given the information I've seen, there are no downsides to a Help to Buy for a buyer, it's money for nothing, when compared to a standard 95% mortgage!

nakiwala123

The last time i checked (May 2013) the NW STB was at 5.49% for a 4 yr fix. Is this still an option?