Do you 'have to' take out a Help To Buy Mortgage?

MoneySpendingExpert888

If you want to go through the Help To Buy scheme, do you have to take out a H2B mortgage?

decent mortgage rates are currently around 1% mark at 65-70% LTV but the H2B mortgage rates are something around 4-5%?

i worked out that over a lifetime on this product you'd be paying £150,000 more in interest than a non-H2B mortgage (on a £300,000 value home)

So from what i can gather your new-build property will be non-negotiable on the price, you will only own 80% of the property, you will pay approx £150,000 extra in interest (compared to a non-H2B) and you will have have some more extra interest to pay on the 20% government loan after 5 years?

i think i must have got some information wrong somewhere right?

Jon_B_2

Yes you have and there are two different schemes:

New build only Equity Share where you put in 5% deposit, government provide 20% equity loan interest free for first 5 years and you take out a 75% mortgage. I just secured a rate of 2.84% over 5 years.

Mortgage Guarantee - available on second hand homes. You put in 5% deposit and get a 95% mortgage from authorised lender, I believe these are around 4-5%?

MoneySpendingExpert888

Hi Jon,

Right i must have been coming across the mortgage guarantee rates and thought it was the Equity Share one.

I cannot seem to find any of the equity share rates online? did you have to enquire with the lender before you found the rate? Thanks

kingstreet

Many lenders offer special products on HTB Equity Loan and they are specifically tagged as Help To Buy/Equity Loan or Affordable Housing.

BTW, you are only going to be on such a product for a limited time on HTB - MG. You don't have to remain on that rate with that lender for ever.

Jon_B_2

MoneySpendingExpert888 wrote: »

Hi Jon,

Right i must have been coming across the mortgage guarantee rates and thought it was the Equity Share one.

I cannot seem to find any of the equity share rates online? did you have to enquire with the lender before you found the rate? Thanks

I had a broker search the market for me.

libf

I'm looking at a mortgage with Nationwide. None of their mortgage are specifically 'help to buy', instead you just select the rate that applies to your circumstand and LTV e.g. first time buyer at 75% LTV or home mover at 70% LTV, etc.

If you've been looking at mortgages for 95% LTV then that might explain it...

PixelPound

How much deposit do you have? The H2B is for those with small deposits, if you have sufficient you won't be using H2B. Generally the lower the LTV the lower the rate will be.