Saving for a Shared Equity Pay Off

ultrasaver57

Hi

I purchased my house using a shared equity deal in 2011. As part of the deal, I in effect have a secured loan on my property for 25% of its value when I purchase it (£56k). The loan is interest free for the first five years, and bears an interest rate of 3% thereafter. The loan is repayable in 10 years from the date of purchase i.e 2021. As with all other shared equity deals, the value of loan increase with the market value of the house

My current aim is to pay the 25% of the loan off within the 5 year interest fee terms so as to:

- avoid paying interest on the loan
- limit the risk of the house price rising as much as I can

As such, I have been saving since day one of moving into the house. I currently have £23k saved and will be saving £1,200 a month. I save into two Santander 123 current accounts. Taking into account expected bonuses, I should have enough to pay the initial £56k by the fifth anniversary.

My questions are:

- Is the risk of the house price rising really worth it and should I be looking to ideally pay this off as part of the mortgage
- Am I wasting opportunities having this money sat in a bank account and should I be doing something more with it?

I have worried endlessly about this and feel I have lost all perspective so any help would be greatly appreciated.

Thanks

Thrugelmir

Can you overpay your existing mortgage? Worth considering if you are paying interest at a higher rate than you are earning.