Help to Buy Equity Loan - Staircasing Question

Kotov

Hi,

I have been wondering something about the help to buy equity loan and so thought I would put it to the experts!

Note I am referring to the London help to buy scheme.

My question relates to the optional lump-sum repayments of the government loan within the 5-year interest free period.

Let's say the property was worth £400k when I bought it and I now want to make a 10% "staircasing" payment to the government.

I read somewhere this 10% is calculated on the current property value. If that is the case, how is this value calculated each time I want to make a payment? Do I need to pay for my own independent valuation every time I want to staircase, or will the government provide a valuation for me?

Or, do all staircasing payments within the 5y period apply to the original property value (£400k), effectively making the equity loan "free" if I manage to pay it all off within 5 years.

I hope the question is clear and i appreciate in advance any help you are able to give.

smichr

Note that the 10% is of the overall property value.

So if you wish to staircase, it's basically in one chunk or two - and yes, you'll have to pay the agency admin fee (around £200) plus a valuation (i was quoted £240 outside London).

Kotov

Thanks for the quick reply.

Note London equity loan is up to 40% instead of 20% so few more possibilities than one chunk or two (unless I'm missing something?)

Interesting.. So it may be better to go without the equity loan unless absolutely needed then if we expect the property price to rise faster than the mortgage rate.

We are currently in the position of being able to scrape together a 15-20% deposit and was wondering if it was worth using the help to buy to access a better rate (lower LTV).