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Help to Buy Confusion
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Madglover
Posts: 16 Forumite
Hello,
So we've just met with our mortgage consultant as prospective new buyers. Exciting and scary at the same time.
We have been looking at the H2B equity loan
The rates we could get are incredibly low and obviously tempting as you are techinically using a 75% LTV. Our broker was showing us the rates etc. But on a prospective £300k house it would be £60k of equity loan
The fees are then after 5 years 1.75% of the loan per month is that normal that would be £12k a year so 20% interest subject to rise at 1%+ rpi per year?
Or is this which confusing me?
https://www.which.co.uk/money/mortgages-and-property/first-time-buyers/guides/help-to-buy/help-to-buy-equity-loans
So we've just met with our mortgage consultant as prospective new buyers. Exciting and scary at the same time.
We have been looking at the H2B equity loan
The rates we could get are incredibly low and obviously tempting as you are techinically using a 75% LTV. Our broker was showing us the rates etc. But on a prospective £300k house it would be £60k of equity loan
The fees are then after 5 years 1.75% of the loan per month is that normal that would be £12k a year so 20% interest subject to rise at 1%+ rpi per year?
Or is this which confusing me?
https://www.which.co.uk/money/mortgages-and-property/first-time-buyers/guides/help-to-buy/help-to-buy-equity-loans
0
Comments
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I have no idea how the equity loan works but surely this is a question for your broker?0
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You will not be charged loan fees for the first five years of owning your home, but, in the 6th year, you will be charged a fee of 1.75% of the loan’s value. After this, the fee will increase every year in line with inflation. The annual increase in the fees is worked out by using the Retail Prices Index (RPI) plus 1%.
For instance, if the RPI is 5% at the end of Year 6 of your Equity Loan, the fee will increase by 6% from 1.75% in Year 6 to 1.86% in Year 7 (which is 1.75% + (1.75% x 6%) = 1.86%).
taken from: mortgageadvicebureau website0 -
Page 18 explains how the payments are calculated. If you have a £40K loan you pay £712 in year 6.
https://www.helptobuy.gov.uk/wp-content/uploads/Help-to-Buy-Buyers-Guide-Feb-160216.pdf0 -
I don't think you pay 1.75% per month, you will be charged 1.75% of the loan value in year six and will pay it back monthly. It's not very clear from the link you posted but that seems more likely than them suddenly expecting a grand extra from you every month.
Have a look at page 3 on this PDF from Santander, I think it explains it fairly well: https://www.santander.co.uk/csgs/StaticBS?blobcol=urldata&blobheadername1=content-type&blobheadername2=Content-Disposition&blobheadervalue1=application%2Fpdf&blobheadervalue2=inline%3Bfilename%3D582%5C688%5C090114_pdfb.pdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1314015991757&maxage=36000
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