Help to Buy Optimal payback time?

StuBobs

Hi, I'm hoping this question has not been asked already but:

'Is there an optimal point in time to best aim to have the Help to Buy loan repaid'.

Obviously there are many variables, the Mortgage product APR, the amount of years left on your discounted period of mortgage, RPI, the rise (or fall) in the value of the property the Help to Buy loan is against.

I'm wondering if there can be a tool/calculator created that requires user input for known figures like mortgage APR and number of years remaining that will then dish out various scenarios for optimal payback time.

Obviously the 1st 5 years are interest free therefore it would be beyond this point, i would also assume that year 6-8 would also be cheaper to pay the H2B interest rather than remortgaging with the previous H2B loan added to the mortgage.

If the calculator can be created in theory, I think Martin should add this to his site to help Money Saving wannabies like myself plan for the best opportunity in order to save money.

If somebody would like to try i have some figures for you to look at

Mortgage £212,400 @ 3.15% fixed for 5 years
Personal deposit £50,000
Help2Buy loan £65,995

interest charged after year 5
year 6 = 1.75%
year 7 = 1.86%
year 8 = 1.97%
year 9 = 2.08%
year 10 = 2.21%

dimbo61

No one can give you an answer to this question.
Will your property go up or down in value over the next 5 years !
Can you afford to overpay your mortgage each month for the next 5 years?
Will you be able to remortgage in 5 years time and pay off the Help2Buy Loan ?
If you can overpay ( IF ALLOWED?) each month and build up savings in cash ISA,s

getmore4less

Optimising multiple loans is not that straight forward when you have to factor in renewals that have unknowns like fees.

You could throw in Zero % purchase and BT credit cards in the mix along with the H2B loan.

In most cases since the motivator for the H2B was affordability that will be the driving force on optimising the payback.

those h2b rates it is unlikely rates is something you will need to worry about as it is unlikely you will ever get a mortgage better than those but RI may be a lot more than 5%.

Then you have to factor in that it is an equity loan so you get stuffed if prices go up.

the reality is you are trading interest free against house price rises being less than the mortgage rate. If house price rises are more than the mortgage rate get rid of the equity load ASAP(factoring in costs).