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Help to buy equity loan- exit options
graeme647
Posts: 14 Forumite
Hi all, I recently (January 16) purchased my first home using the government equity loan help to buy (5% own deposit 20% loan from the govt).
I took the mortgage over 25 years knowing full well that I could afford it over a shorter period as this gave me security in case of future reduction in salary etc.
As such I'm in a position to either save or overpay a significant amount each year. My savings are approximately the same rate as my mortgage so there's little in it when deciding which is better on a cash basis.
I've taken the decision to overpay the maximum each year over the period of the help to buy scheme (5 years which is the same as my mortgage introductory rate period) and at the end of the 5 years I hope to have paid off enough capital to make a much lower loan to value possible at this time with a view to re-mortgaging to buy out the help to buy scheme and take full ownership at this time.
I just wondered what peoples thoughts on this were, are there any pros and cons or better alternatives? I can only see one other option which would be to invest the savings instead and buy out of help to buy in 5 years with cash, however as I figured I cannot guarantee the interest income over the next five years and as I cannot predict the help to buy cost at the end of this time it was better to roll it into my mortgage and deal with it all at once at the end.
Any thoughts would be gratefully received.
I took the mortgage over 25 years knowing full well that I could afford it over a shorter period as this gave me security in case of future reduction in salary etc.
As such I'm in a position to either save or overpay a significant amount each year. My savings are approximately the same rate as my mortgage so there's little in it when deciding which is better on a cash basis.
I've taken the decision to overpay the maximum each year over the period of the help to buy scheme (5 years which is the same as my mortgage introductory rate period) and at the end of the 5 years I hope to have paid off enough capital to make a much lower loan to value possible at this time with a view to re-mortgaging to buy out the help to buy scheme and take full ownership at this time.
I just wondered what peoples thoughts on this were, are there any pros and cons or better alternatives? I can only see one other option which would be to invest the savings instead and buy out of help to buy in 5 years with cash, however as I figured I cannot guarantee the interest income over the next five years and as I cannot predict the help to buy cost at the end of this time it was better to roll it into my mortgage and deal with it all at once at the end.
Any thoughts would be gratefully received.
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