Help to buy equity loan repayment

tezzab2016

My question is it states the loan needs to be repaid when the property is sold or the mortgage term ends whichever comes first. So if after25 yearsyoupaid your mortgage off but you don't intend to sell the property and have not and can not repay the equity loan what happens then? How do the government get their money? Can they force repossession?

Thrugelmir

tezzab2016 wrote: »

Can they force repossession?

If the mortgage term has ended. Then yes. What other option do they have?

Mathias123

I seem to recall reading somewhere that you pay it back at the end of your mortgage.

satchef1

Assuming a purchase price of £200k, average RPI of 2.5%, and average house price increases of 4%, by the end you'd be paying over a grand a year in interest payments, and you'd owe nearly £107,000. I'd call those figures low-ball. The reality is likely to be worse.

You'd essentially have three choices:

1. Sell.
2. Try and remortgage.
3. Accept that the home will be repossessed unless you have some other means of repaying over £100k.

TBH though, you'd have to be pretty monumentally stupid to let things get that bad.

FutureGirl

Can you pay some/all of it at anytime?

As in, if I save money throughout the year, can I then use that to pay off some of the loan, or does it have to paid all in one go? Or if I come into some money, can I just decide to pay it off, even though I'm not selling, or not at the end of my mortgage term?

ALostMachine

FutureGirl wrote: »

Can you pay some/all of it at anytime?

Yes, but the minimum payment is 10% of the current market value at any time. You can also pay it all back at once.

tezzab2016

But what if you can't repay anything at the end of your mortgage term? And have not paid anything?

tezzab2016

Unfortunately I have friends coming into the 5th year having not paid a penny back on this loan I'm pretty sure they have no idea what they have got themselves into. With nobody coming to mortgage term end on one of these due to being so relatively new there's no info anywhere that's tells you what happens when you can't/ don't pay it back

alex_163163

Future girl - this is a useful website for info on how you can pay back the loan
http://www.myfirsthome.org.uk

Thrugelmir

tezzab2016 wrote: »

Unfortunately I have friends coming into the 5th year having not paid a penny back on this loan I'm pretty sure they have no idea what they have got themselves into. With nobody coming to mortgage term end on one of these due to being so relatively new there's no info anywhere that's tells you what happens when you can't/ don't pay it back

Mortgage term won't be for 5 years. It will be much longer. After 5 years though the loan isn't interest free. They will start to be charged interest on the original equity loan.

tezzab2016

Yes that's what I mean the 5 year interest free period on the loan will be ending and nothing has been paid they had a 25 year mortgage and borrowed £40k. So in 20 years time when they not paid anything to it and don't want to sell I'm guessing repossession will happen