HTB Equity Loan and Mortgage Term

stalkah

Hi All,


Quick question (hopefully) we're just about to buy a new home and use the HTB EL.


I've read that this must be paid back in 25 years (which is fine as we plan to pay back within the 5 years interest free) does this mean we can only have a mortgage term of 25 years?


Thanks in Advance

betmunch

I'd have to check, but pretty sure you can shorten the mortgage term to as little as the lender will allow.

Failing that just take a mortgage with no (or a short) Early Repayment Penalty and massively overpay when you can so the mortgage is still gone in 5 years.

stalkah

Sorry probably should have worded it a bit better...


I meant does it mean we're limited to up to 25 years? Ideally would have liked 30 or 35 years.


Thanks

betmunch

Ahhhh, was just thinking, hang on how would you qualify if your able to pay back that quick!!!!

Afraid I've only ever done them on 25 years so never checked longer than that.

Teaandtoast0124

I no barclays allow 35 yeArs

betmunch

Just had a quick look while my computer sims past an easy cup game in FM!

You can have a mortgage over 35 years, but the equity loan must be paid back no later than 25 years

stalkah

Excellent news thank you for checking

The mortgage advisor who had to pre-approve us for the developer said it was only 25 years but when I original spoke to my normal mortgage advisor we were looking over 30 years, he's away on holiday atm so couldn't run it by him and was starting to worry.

The next challenge for him will be to find a lender that allows cash incentive managed to get stamp duty thrown in at about 5.5k

betmunch

Good luck with that!

Sad the builders advisor said 25 years, they should know this off by heart. It took me less than a minute to check and I rarely deal in new builds

glasgowgirl80

My HTB authority to proceed states that my mortgage term can be up to 35 years. I'm in Scotland though so think the rules are different.

kingstreet

The cash incentive issue varies from lender to lender and what that equates to in percentage terms.

Some lenders don't allow cash incentives at all on HTB - EL through just legal fees, to stamp duty, 1% max and finally upto one lender allowing 5% of the purchase price.

At one time, a few lenders did restrict the mortgage term to the EL term but that isn't happening today.

stalkah

Thanks king street it works out around a little less than 2%