Help to buy - Query

GC2012

Hello,


I am currently looking for a house and a new build near where I live has caught my eye.

Having read all sorts online about help to buy I am still left with a question..

The house is £250k, I can put down around £15-20k, the government equity loan is then around £55-60k.

The monthly repayments are coming back around £700 odd per month which is fine for me.

What I would like to know is when does the loan start getting paid off? Will I then be paying a mortgage as normal and a loan to the government or is the money from the loan only 'collected' when I sell the house or pay it off?


Regards
Jack

ed67812

After 5 years, the loan stops being interest free. The amount of interest will depend on RPI inflation. So in 5 years you will have to pay the mortgage and the interest on the loan.
At some point in the next 25 years, you'll have to pay back the loan. Bear in mind that if you had a 20% loan then you will have to pay 20% of what the house is worth at the time you repay. There are options to repay parts of the loan at different times though.

stator

As above, the loan doesn't get paid off automatically, but they do start charging interest. It is generally assumed that you will remortgage and pay off the loan at some point.

dgtazzman

ed67812 wrote: »

There are options to repay parts of the loan at different times though.

That isn't really accurate, you can pay off the loan in 10% chunks at any time, in other words, if you take the full 20% equity loan, you have the option of repaying half of it, rather than the full amount at any time. You would continue paying interest on the other half till that is paid off.

Do keep in mind that when paying back any part of the loan, you will need to pay for an accredited surveyor to come and value your property, which you will have to pay for out of your own pocket (think it cost us between 200-300 when selling our HTB house).

Octaben

to clarify, if the property is 250k then the Equity Loan will can be between 25 and 50k, not 55-60k. It's 10% minimum and 20% maximum

kingstreet

Octaben wrote: »

to clarify, if the property is 250k then the Equity Loan will can be between 25 and 50k, not 55-60k. It's 10% minimum and 20% maximum

No longer the case.

That changed in February.

You can pick between 0% to 20% outside London and 0% to 40% within.

Whole % only, no fractions thereof...

Octaben

You are right that it can be up to 40% in London, but it still has to be a minimum of 10%. Maximum deposit is 65% and minimum mortgage is 25%

Octaben

And if the house is 250k then he's not buying in London, so I would say 25k-50k is accurate

kingstreet

Yet another call to Orbit for the duff information they fed me when I called them about this...