Help to buy

Yates78

Hi - if anyone bought a new build through the original help to buy scheme (5% deposit 20% govt contribution) what is the best way to manage/repay the 20%. Can you re-mortgage once you have 20% equity to pay off the 20%..

danielhermann

You are probably thinking of a home equity loan but inadvertently using the word remortgage loan. To answer your query, you could remortgage ie get a fresh loan and repay the old loan. You would do this only if you get a better deal in terms of lower interest or a larger credit. A home equity loan on the other hand, allows you to obtain credit on the difference between the value of the property and the value of the mortgage outstanding. The loan would again work on the same basis as a mortgage. So to answer your question, yes you could get a home equity loan.

kingstreet

I smell spam!

Home Equity Loan? US response, IMHO.

Yates - you can repay the equity loan by further advance from your existing lender, or remortgage to a new lender. Either way, no-one will provide upto 100% of the value of the property, so you'll normally need the total borrowing to be within perhaps 85% of the property value, so you'll need equity of 20%, plus another 15% on top.

You don't say if this is Govt (HTB/FB) or a developer shared equity scheme, so it's difficult to suggest anything further about the mechanics of the repayment of the Equity Loan. Look here for the Govt schemes;-

http://www.myfirsthome.org.uk/

Yates78

Hi it is the govt help to buy - I put 5% deposit down and give contributed 20% which I start to pay I back after year 5.. So what is the total equity needed to pay back the govt borrowings through additional borrowings when I can remortgage?...

leveller2911

Yates78 wrote: »

Hi it is the govt help to buy - I put 5% deposit down and give contributed 20% which I start to pay I back after year 5.. So what is the total equity needed to pay back the govt borrowings through additional borrowings when I can remortgage?...

Did you not look into this before you bought the house?. :eek:

Yates78

Of course - just wondering on other peoples opinions on how they would deal with it?

Thrugelmir

I would overpay the mortgage thereby giving myself equity with which to remortgage at a later date.

Yates78

Thanks - that is my preferred option, I thought about paying the whole 20% back or stair casing.

kingstreet

You can repay 10% of the property value (half of what you owe), or 20% of the property value (the full amount you owe) there is no other option. So, you can't do bits in between or pay it off monthly.

The fee you start to pay in year six is the fee, it is not repaying any of what you owe.

kingstreet

Yates78 wrote: »

Hi it is the govt help to buy - I put 5% deposit down and give contributed 20% which I start to pay I back after year 5.. So what is the total equity needed to pay back the govt borrowings through additional borrowings when I can remortgage?...

You need to be able to borrow enough to repay the existing mortgage, the equity loan 20% of the then property value and leave enough equity in the property to satisfy the lender.

ethank

You also cannot obtain further lending from the property other than to repay the second charge with HCA, therefore making overpayments in the hope of borrow to repay the HCA could entirely depend on the market at the time.

I will be putting mine in my ISA!