Using H2B to top up deposit - reduce monthly rpts,

Flatliner27

The wife and I are looking at new builds circa £400k, we have a deposit of £115k - 100 equity / 15 cash.

I would much prefer a max remortgage term of 25 years and not 30, but I'm open to doing it if it's the best option.

I'm trying to balance remortgaging for 25 years while keeping repayments at £1000pm and think it's only possible if we use H2B with a view to roll it into the mortgage after the 5 year interest free period, otherwise we're looking at 30 years.

I've compared some numbers using Nationwide's mortgage calculator and got down to two approaches which would keep repayments in the target area of £1000.

Option 1)
- 25 year mortgage
- £115k deposit
- 10% HTB loan
Monthly Repayment: £1086

Option 2)
- 30 year mortgage
- £115k deposit
- No HTB loan
Monthly Repayment: £1074

What are your thoughts on each of these?

My gut says Option 2 - reject HTB because we'd end up consolidating the loan after 5 years (on the back of a blank cheque!) for yet another 25 years, so doing 30 anyway.

What else is there to consider here? If house prices are stagnant for 5 years then I'm guessing it would be best to have used HTB?

Cheers :beer:

getmore4less

You are trading HTB interest free and the lower rate interest savings on the rest for the loss of the increase in equity of the HTB portion.

You can work out what the house price rise needs to be to be worse off in 5 years.

Then it is a case of do you feel lucky.

(with your LTV rate difference will be small, the benefit kicks in for those with 5% deposits as they can get 75%LTV rates)