Help to buy staircasing

alexthepenguin

I took out a help to buy equity loan mortgage two years ago on a new build and my existing mortgage deal is coming to an end soon.

I have two options:

(1) continue to get another mortgage deal not paying off the equity loan. In this case I will only have access to a handful of lenders that do HTB mortgages. (The current best rate is around 2.09% - LTV would be around 64%) But on the other hand, my LTV would be lower and I would be able to pay off the capital part of the mortgage quicker and hopefully in another two or three years' time I would then remortgage to pay off the equity loan and get a good mortgage for the whole balance (as LTV would hopefully be lower)

The drawback of this option is that the five-year interest free period is not really "interest free". Say if my house price goes up significantly then my equity loan will increase accordingly as well and it might end up more costly to remortgage it in two/three years' time.

(2) Remortgage now to pay off the HTB in full. This will mean I'll get a mortgage with just under 85% LTV. However, I will be have access to all lenders (the current best offer is around 1.59% (on a like-to-like basis as option 1) in the 85% LTV band).

Having said that as my LTV is now higher I'll have a higher monthly repayment amount and also will be paying more interest.

Any thoughts?

I'm interested in knowing what a reasonable rate differential would be for option (2) to be a more attractive option than (1). Say for example, if the best rate I can get by remortgaging off HTB is 1% (say) and the best rate for keeping HTB is 5% then I would be better off opting for (2).

I'm also interested purely from the amount outstanding. Say in two years' time which option will give me the least debt.

I'm aware that this all depends on my personal circumstances and the future economic/market outlook but I would appreciate any general thoughts on this subject.

Thanks a lot.

glosoli

can you advise of the house value, balances, and terms remaining?

alexthepenguin

glosoli wrote: »

can you advise of the house value, balances, and terms remaining?

Purchase price in 2014: £400,000
Balance as at June 2016: around £285,000 (in addition there is 20% equity loan)
Term remaining as at June 2016: just a bit over 23 years
Zoopla house price as at May 2016: £445,000
Estimated house price by current lender (based on Halifax housing index) as at May 2016:£ 490,000

In reality my feeling is that the actual house price will be closer to the Zoopla estimate.

Thanks a lot.

Gazo76

HI Alex,
We're in exactly the same position, initial 2yr rate has run out and looking to re-mortgage.
After completing the application for an HSBC re-mortgage (originally with Natwest), they've suddenly advised us today that they do not do HTB re-mortaging.
Can I ask which lenders you've found will actaully re-mortgage HTB please?

Our situation is a little different, currently just under 50% LTV, so you'd think any mortgage lender would be only to eager to help out, but now wondering whether to pay the 20% back to the government in order to get a full mortgage loan at the lower rate.

House bought for 170k
Mortgage now down to 84k
Owe government 34k

alexthepenguin

Gazo76 wrote: »

HI Alex,
We're in exactly the same position, initial 2yr rate has run out and looking to re-mortgage.
After completing the application for an HSBC re-mortgage (originally with Natwest), they've suddenly advised us today that they do not do HTB re-mortaging.
Can I ask which lenders you've found will actaully re-mortgage HTB please?

Our situation is a little different, currently just under 50% LTV, so you'd think any mortgage lender would be only to eager to help out, but now wondering whether to pay the 20% back to the government in order to get a full mortgage loan at the lower rate.

House bought for 170k
Mortgage now down to 84k
Owe government 34k

When you say HSBC does not accept HTB remortgage, do you mean remortgage without paying off HTB?

I'm actually hoping to remortgage with HSBC as a normal mortgage (by additional borrowing so that the equity loan is redeemed)