Remortgage HtB equity scheme

coolad86

brit1234 wrote: »

The Help to Buy Time Bomb. I recommend that everyone look at the bad elements of Help to Buy before considering it. In reality it only helps the builder inflate prices and leaves the owner with big debt.

I just find it staggering the almost half a million price tags of 1 bed flats being advertised in London.

I disagree. In a worst case scenario, if house prices do crash in London, HTB EL will provide a shield of 40% of the value of the crash, because it is an equity loan (not a normal loan). So, if you are bearish about house prices, compared to buying outright, HTB EL is a no-brainer in my opinion. Especially if the alternative is frittering away money in extortionate rent. That money can instead be converted to equity at least. If prices stay the same, or even rise, buyers will be in an better position than renters.


For me, my new mortgage payments using HTB EL will be approximately half my current rent, in the same size apartment. How is that a bad thing?

mrsunnybunny

coolad86 wrote: »

I disagree. In a worst case scenario, if house prices do crash in London, HTB EL will provide a shield of 40% of the value of the crash, because it is an equity loan (not a normal loan). So, if you are bearish about house prices, compared to buying outright, HTB EL is a no-brainer in my opinion. Especially if the alternative is frittering away money in extortionate rent. That money can instead be converted to equity at least. If prices stay the same, or even rise, buyers will be in an better position than renters.


For me, my new mortgage payments using HTB EL will be approximately half my current rent, in the same size apartment. How is that a bad thing?

Fully agree, same for me. I will be saving about 50% in rent and moving from a small apartment into a large house. Even after 5 years, including HtB fees and assuming I end on the SVR, my monthly payments will still be less than my current rent!

brit1234

coolad86 wrote: »

I disagree. In a worst case scenario, if house prices do crash in London, HTB EL will provide a shield of 40% of the value of the crash, because it is an equity loan (not a normal loan).

If prices fall then it with effect the equity loan and mortgage part of the home by the same %. So if you have only a 5% deposit on a overvalued property then you could easily have your 5% deposit wiped out. We have already heard about the remortgaging problems, that will be worse with no equity. London newbuild prices are taking a beating at the moment unlike the rest of the country apart from Scotland. The contagion could ripple out of London.

Just keep your eyes open to any potential pitfalls.

Gazo76

We are currently going through the same issue as the OP.

Can anyone kindly point me to a list of mortgage providers who do lend to those with an EL still in place?
Initial 2yr fixed term running out next month and our current LTV is under 50%.
Still have the 20% EL to pay off.