Re-mortgage or Pay Government rental on Help to buy?

KJ80

Hi there, so my first post here.

i purchased a home late 2013 for 333,000. so with help to buy the government lent £66,600 and i contributed 5% @ £16,650.

i have a fixed mortgage currently at 1.69%. due to end at the end of the year.

that will be 4 years. im aware that after five, i will have to pay 1.75% annually ( £97 ) / month rental with an annual 1% increase.

i could remortgage the home to pay the government loan. the current value is now £445,000 at least. looking on line my new repayment would be £1,332 / month with an LTV of 65.75%
at the moment my repayments are £1070.

I've no plans to move on from this property, but unsure as to what to do... i would like to save to invest in a second property, and as i understand without buying the equity i am unable to buy a second home. i am unsure if this is correct. also this may not happen for some time.

please anyone who might be able to advise or ask questions for me to answer to would be great.

thanks all.

getmore4less

look at it this way.

£66,600 is interest free but now will cost £89,000

rate of return over
3.5 years 8.64%
4 years 7.52%
5 years 5.97%

how much is this place going to be worth by the end of the year?

What rate would a 95% mortgage have been?

i will have to pay 1.75% annually ( £97 ) / month rental with an annual 1% increase.

read the terms again that is wrong.

I think you need to concentrate on buying all your first house before going after another one.

silvercar

The downside is the higher monthly payments, the upside is that you will own 100% of your property.

kingstreet

Assuming inflation of 5% per annum, the starting rate of 1.75% will become 1.87%, 1.98% and so on...

£97 in year six
£104 in year seven
£110 in year eight and so on.

KJ80

sorry yes i mis-quoted the interest terms as kingstreet kindly corrected.

it seems obvious to re-mortgage and pay off the loan, i was just confused as to whether this make the most financial sense in the short term.

thank you for your help.

kingstreet

Unless you know what is going to happen to property prices and interest rates it's difficult to speculate.

dimbo61

Well done your home has gone up in value by £112,000 in less than 4 years!
Do you have to pay back more than the £66,600 HTB loan amount ?

brit1234

dimbo61 wrote: »

Well done your home has gone up in value by £112,000 in less than 4 years!
Do you have to pay back more than the £66,600 HTB loan amount ?

Yes looks like the owner owes about £100,000 on the loan if treated as a percentage.