Help to buy questions

Tylium

Hello,

I have a help to buy question. I'm looking at a new build, £215,000. I have £30,000 specifically earmarked for a deposit. I save on average around £500 a month and currently rent at £600 a month.

I'm thinking of using the help to buy scheme with a 5% deposit then either immediately pay off £30,000 from the mortgage or use that money to significantly overpay in the first few years.

Any advice on this idea?

libf

You can put down more than a 5% deposit, up to in the region of 45%. So you can put the full £30k in without having to mess about with overpayments if you want. (Assuming that you have other money for moving costs and earn enough that the mortgage needed is less than 4.5x your salary.)

chanz4

they may say you can afford to buy on the open market if too much deposit

kingstreet

Minimum mortgage is 25%, so it's possible to put down a deposit of as much as 65% with a 10% equity loan, or 55% with 20%.

Putting down the bigger deposit at the outset will get you a better rate, so your plan is not sensible.

JamesN

It's all about the loan to value when it comes down to it as this gets you the better rate as mentioned above. It tends to work in 5% tranches. E.g you get more off at 66-70% is one rate but if you put a bit more down and got 65% ltv you'd get a better rate.

I'm in a similar position and putting down 25% myself and 20% htb. Still waiting on it going through but my application is a 5 year fix at 2.34%. Hope that helps.

Remember to save money for fees as well and you'll want some left over in the bank.