Mortgage and HTB loan free wannabe!

LessCake

Hello all you MFW's :hello:

It is time for me to set up camp in this section (previous, very short, diary here) as I have just got my very first mortgage! As the title shows, I also have a help to buy equity loan which is interest free for the first 5 years. I would love to be able to get the loan paid off asap and I am torn between saving up to do this over the 5 years at 0%, or if I should focus on making overpayments on the mortgage and deal with the loan at a later date. Time to do some more calculations me thinks!

I have browsed through a few diaries on this board already and I have read some really great stuff! I hope to cross paths with some of you on our MFW journeys; any advice and support is welcome and will be appreciated!

Teaandtoast0124

Im in the same position. Will watch this closely. Although I think making over payments is the best option.

LessCake

Thanks for your comment, Teaandtoast0124. Overpayments on the mortgage does seem the best way to go. Have you used the MSE overpayment calculator to see how much difference overpayments can make? I found it really motivating (as did my not so MSE OH) to see the numbers like that.

Have you moved into your new home yet? We've got a few weeks yet, so I'm kind of jumping the gun starting a diary already, but I guess now is better than never!

Teaandtoast0124

Yes ive used that. If I pay £100 a month extra it says I could shave 4 years off the mortgage. But we can't predict future intrest rates. No I haven't moved in yet. Completion date is the last week of April. I can't tell you how nervous and excited I am haha.

laurasavon

Can you work out how much the HTB part of the loan is, divide by 60 and that would be how much you need to pay to cover it over the 5 years

As its interest free you would get a better return by saving the money and paying it off at the end, but if there's any chance of spending it then possibly better paying it as you go along as you'll get a much better deal if you need to remortgage in the future

Don't forget to save an emergency fund if you don't already have one

LessCake

I know the feeling! Best of luck with the move, it will all be worth it in the end.

Teaandtoast0124

That would be saving an extra £583 a month. I can't afford that haha.

And thank you good luck with your move aswell :-)

LessCake

laurasavon wrote: »

Can you work out how much the HTB part of the loan is, divide by 60 and that would be how much you need to pay to cover it over the 5 years

As its interest free you would get a better return by saving the money and paying it off at the end, but if there's any chance of spending it then possibly better paying it as you go along as you'll get a much better deal if you need to remortgage in the future

Don't forget to save an emergency fund if you don't already have one

Unfortunately we wouldn't be able to save enough each month to cover the whole 20% by the end of the 5th year. Depending on what happens in the future, the value of that 20% may go up or down, so it's difficult to plan a complete pay off.

My understanding is that the HTB loan cannot be paid off gradually - you can either pay half of it (10% of the property value at that time) or the full 20%. It would be great if we could do it monthly, but the only mothly payment I read about was the montly interest payment that starts after year 5.

We know some people that remortgaged at the end of year 5 to buy out the 20%. This extended the length of their mortgage and put up their montly payments. It is an option we may look at (although we don't really want to extend the mortgage term) and I am hoping that making overpayments on the mortgage in the first 5 years might put us in a better position to be able to do this.

Edited to add that I think the above paragraph is what you were suggesting laurasavon, not paying the HTB monthy. My brain is clearly not working today - sorry about that!

LessCake

I have been inspired by the 'All the small things' thread to start getting organised before the move. I would like to have a huge declutter and have started to put things in bags/boxes for either ebay, car boot sale or charity shop (one box and 2 bags dropped off so far). Where possible, stuff that can't be sold or donated will be recyled and I will donate any ebay or carboot stuff that doesn't sell before the move. Oh, and I mustn't forget Gumtree - I have done quite well selling stuff on there recently! The money from all of this can go towards the first overpayment or two.

I also need to start doing things like cleaning the oven (yuck!) and wiping down the odd scuff mark on the walls. We are in a rented property at the moment and the deposit is just over £1000. We have looked after the place, so we will hopefully get all of this back, but I would rather put in the effort to make everything squeaky clean, just to be sure. We also have a lovely landlord (we feel guilty handing in our notice, that's how good he has been to us!) so I want to make sure he won't have anything to worry about before reletting the property.

Right, half an hour before The 100 is on - time to get cracking with some decluttering!

LessCake

Contracts have been exchanged and the countdown to completion begins! We are very excited and wish the house were ready now, but at least the wait gives us time to keep getting things in order.

Several bags/boxes have already made their way to the charity shop (MY OH has finally caught the decluttering bug!) and I am trying to keep on top of relisting items on Gumtree. We still haven't given our landlord notice yet but will be emailing him this weekend to break the news.

The finances are nicely in order with the solicitors fee's sat waiting in an easy access savings account and our emergency fund building up in another. Once we have moved we plan to start looking for new jobs as we will be near an area where there are a lot more opportunities and the salaries are a lot higher! We live very comfortably on what we earn at the moment, so if we do end up earning more this will be used towards the mortgage overpayments - that's my master plan anyway!

Monie

Hello

I shall follow your progress as me and OH are hoping to get a new build with HTB too soon.

I have the plan in my head think op mortgage would be best then remortgage after 5 years but we shall see!