Help to buy - Clearing loan

Andyjp1

Hi All,

Just want to see if anybody else has experienced what i'm currently experiencing?

I'm into year 4 of the help to buy interest free period and have decided to try and get a remortgage with another lender to pay off the loan from the government.
4 Banks I've approached now to get this loan but because the loan to value of the property is 89/90%, nobody is accepting me!
I've paid the so called "admin" fee of £200 to the government lender and another £200 to have the property valued. If I dont get this sorted within the next 5 weeks, i'll lose the £400 and would have to pay again as it expires in 3 months of valuation!

YHM

Andy

You need to sit down with a broker for this one. Quite a few lenders will allow you to capital raise to pay off the HTB loan upto 90%....

Andyjp1

Thanks for the quick reply, i'm just about to give one a call which im hoping he can help.

What does capital raise mean?

YHM

Sorry, technical term. Its basically releasing tied up equity in the property to pay for something. In this instance, you are releasing equity in your property to pay off the loan.

Andyjp1

Ahhh ok!

What a head ache I have over all of this!

YHM

Pass the headache to your broker. That's what we get paid for!

Andyjp1

Well I was hoping to avoid any fee's and hope they get commission, not got a money tree to keep dishing out, gotta find more cash for a solicitor to deal with it all also!

TrickyDicky101

You do know that even after the initial 5 year interest free period the subsequent charges are still (currently) pretty low and probably will continue to be less than the mortgage interest you might otherwise pay on refinancing?

There is of course the point that your repayment of the HTB loan will depend on the house valuation in future (and over the last 30 years house prices have invariably risen much faster than other inflation/earnings) and thus paying it off now could be cheaper in the long run.

Andyjp1

Just spoke to a broker, nice guy, did mention Capital what you mentioned also.

Silvertabby

You do know that even after the initial 5 year interest free period the subsequent charges are still (currently) pretty low and probably will continue to be less than the mortgage interest you might otherwise pay on refinancing? Posted by TrickyDicky

Are you sure? Year 6 may not be too bad, but anyone in year 7 onwards will have to pay 5.75% interest only.

I thought the idea of these loans was just to help out over the first 5 years, after which people should re-mortgage in order to pay off the HTB loan?

Interest rates for paying back your loan

Years 1-5: no fees
Year 6: 1.75% of the loan
Year 7 onwards: 1.75% + RPI + 1%
These fees do not go towards paying off the government loan.
When you sell your home, or the mortgage is paid off, you have to repay the equity loan plus a share of any increase in the value.

TrickyDicky101

Silvertabby wrote: »

Are you sure? Year 6 may not be too bad, but anyone in year 7 onwards will have to pay 5.75% interest only.

I thought the idea of these loans was just to help out over the first 5 years, after which people should re-mortgage in order to pay off the HTB loan?

That example is poorly worded: RPI + 1% is not the increase charged on the whole of the loan - it is the increase charged on the initial fee of 1.75%.

Check out page 18 of the official document:

https://www.helptobuy.gov.uk/wp-content/uploads/Help-to-Buy-Buyers-Guide-oct-16-V1016.pdf