Should we pay back the Help to Buy loan when we remortgage?

Carrie_bie

Hello everyone,

I'm keen for your opinions on our situation as my boyf and I are struggling to make a decision. :mad:

We bought our flat in South West London about 2 years ago with the Help To Buy scheme, so the Government gave us 20% as an interest free loan for 5 years. Over the last couple of years we have paid a fair amount into the equity of the flat, which apparently means lenders won't offer us the lowest rates as they don't see us as profitable enough. Our mortgage broker has offered us a couple of options.

1. Keep the help to buy loan, and re-mortgage with a rate of 2.09% (fixed 2yrs)
2. Buy out the help to buy loan as part of our re-mortgage, and get a lower interest rate of 1.34% (fixed 2yrs)
3. Buy out the help to buy loan as part of our re-mortgage, and get a tracker interest rate

I'm leaning towards the idea of buying out the help to buy loan, as it means after we pay back the loan, any profit we make on the increase in value will be entirely ours. I'm looking at it in terms of 20% of any profit is probably more than 1.34% of the mortgage interest. However, I worry that this is too simplistic a view...

Our mortgage broker said that many other people who used the Help To Buy scheme had a 5yr Mortgage term, so we're in an uncommon position with having the option to repay it, or keep it......

HELP! :(:(:(

foxy-stoat

Its the cheapest loan (interest free) but the cost to you will be 20% of any increased equity - anywhere else but London I would keep it as is.

kingstreet

Carrie_bie wrote: »

Over the last couple of years we have paid a fair amount into the equity of the flat, which apparently means lenders won't offer us the lowest rates as they don't see us as profitable enough

What does this mean?