Staircasing on a HTB scheme

jimbo83

We are currently looking at taking out a HTB mortgage through the Halifax to utilise the interest free period on a portion of the borrowing for a while.

HTB would be providing 20% of the funding and the current intention is to buy out (via additional lending) 10% or all 20% before the 5 year interest free period runs out.

Do people have any experience of doing this with their lenders? Are they easy enough to deal with, especially if we were only to buy out 10%?

amnblog

Staircasing


The Help to Buy scheme allows you to repay all or part of your equity loan. A
partial repayment is often called “staircasing’.


Staircasing payments can be made at any time and must be a minimum of
10% of your home’s prevailing market value – whether that value is more or
less than when originally purchased. You will need to check any additional
criteria with your lender.


An independent valuer must provide a valuation of your property and you will also be responsible for the associated administrative cost.


If you decide to staircase after five years of ownership, the fees you pay on your Help to Buy equity loan will reduce to reflect your smaller outstanding loan percentage.


If you extend your mortgage to fund your partial repayment of the Agency equity loan, your mortgage repayments will probably increase to reflect the fact that you have repaid some of the equity loan.


The Post Sales HomeBuy Agent will need to approve any increase in your first charge mortgage.

jimbo83

If you staircase and initially buy out 10% at first, do you only essentially make two payments, each of 10% of the market value at the time of payment?

That is what I understood but I have spoken to people how have confused the issue.

Thanks

kingstreet

Yes. If you take a 10% loan you can only staircase and reay the whole loan.

If you take a 20% loan, you can staircase 20% at once, or two lots of 10%.

http://www.myfirsthome.org.uk/schemes/help-to-buy

jimbo83

Thanks.

Our mortgage only has a 2 year initial period, would we need to wait until that ran out before purchasing any element of the 20%.

Or would a lender allow to you increase your mortgage within that period to buy out a share?

I am trying to get hold of our mortgage adviser at the Halifax at present for them to confirm. But if anyone else has a view that would be helpful.

Thanks

kingstreet

A further advance is separate to the main mortgage, so you could request that before your current product ends.

Otherwise, you could wait until it ends, then do a combined product transfer and further advance on the same rate.

jimbo83

Are further advances generally on a higher rate?

kingstreet

That depends on the lender.

I suggest you visit your lender's online resource to see what further advance products might be open to you.

jimbo83

Will a solicitor be required for each Staircasing payment?

kingstreet

"We will write to your solicitor confirming the amount you wish to repay and the payment required for this to happen. We will also provide them with details of how to make this payment. From this point on we will liaise with your solicitor to ensure once payment has been received the legal paperwork is completed. You will receive a copy of any correspondence sent to your solicitor. The process of sending the sealed legal discharge to your solicitor will take six weeks. This time period begins once the discharge is sent to Housing Options Plus from your solicitor."

http://www.myfirsthome.org.uk/schemes/help-to-buy/staircasing