Help to Buy repayments

Jleigh53

Hi everyone

I’m looking for some guidance and info on repaying the equity loan on the help to buy scheme.

I want to know how the repayments work. I’ve phoned numerous people who keep redirecting me to other people who then can’t give me a full explanation.

We’re looking at a house for £160,000.
So with a 5% deposit we need £8000.
The help to buy put up 20%, being £32,000.

Ideally I want to get the equity loan payed off ASAP.

Realistically we wouldn’t be able to afford repaying 20% back in the first five years. And from my understanding you can either pay back 10% of the house value or the full 20% in those years. So if I plan to pay back 10% I understand we need to get the house valued first and then pay 10% of it’s value.

So after the five years we then get charged interest in the remaining amount? During this period can we make monthly payments to pay back the remaining 10% + interest or do we only pay back the interest? And can I pay off lump sums of the remaining loan??

Thanks in advance

Hope I can get this cleared up !!!128578;

kingstreet

No. There is no facility to repay "on the drip."

As you have identified, assuming you borrow the full 20%, you can repay half the loan, or all the loan. There is no other option.

Link to HTB Equity Loan Buyer's Guide;-

https://www.helptobuy.gov.uk/wp-content/uploads/Help-to-Buy-Buyers-Guide-Feb-2018-FINAL.pdf

Jleigh53

Thanks for the reply.

So that!!!8217;s even after the five years?? I can!!!8217;t pay back extra if I wanted?

kingstreet

At any time, you can repay half the loan (10% of the property value) or all the loan (20% of the property value.)

This is the same both during the first five years and after that.

kingstreet

Here's a link to the website of Target, the current post-sales HTB Agent;-

https://www.myfirsthome.org.uk/

If you hit "I want to..." it will tell you your options in each case.

Jleigh53

Sorry if I’m annoying I just want to make sure I understand it. So if for example I chose to pay back 10% in the first 5 years. After that time when the interest starts recurring, I can only pay back the rest of the loan in one lump sum. I’m not able to do it in separate instalments?

Thanks for the help so far, I’ll check out the link

kingstreet

Yes.

Your interpretation is entirely accurate.

You can repay in one or two chunks only, at any time.

Jleigh53

Okay, so when I spoke to an advisor, they said they send a bill each year outlining monthly payments. Are those payments just for the interest?

kingstreet

Yes.

'Fees', not interest.

You can claim SMI/Local Housing Allowance for interest/rent. You can claim nothing for fees.

In year six, you will pay 1.75% of the loan which remains in place and that will increase each year.

If inflation runs at 5%, you'll be paying 1.87% in year seven, 1.98% in year eight and so on.

It's in the Guide.

GrumpySO&SO

It's a rather dumb rule i assume made to trap people into the help to buy loan this having to pay out more than necessary.

I think what many people do however is remortgage they're house. We got the equity loan thing for our first house and that is what our mortgage advisor recommended.

We planned to save save save and repay half and then remortgage the rest.

So make sure you can afford to pay back the equity loan in 5 years before walking into one. Also be aware that you will pay bank not £32k but 20% of whatever the current house value is. So it could be £40k or even more.

We got about £46k off them but paying back £55k from the sale of our house which is annoying but there you go. Now we have moved house, minus the help to buy! I'f we could have done it without the htb first time around (with a decent house) i would have but we couldn't and now we've got to where we want so glad we did.

My advice is to plan how you will repay that loan asap. Don't wait five years and then get but with interest. 5 years is a decent amount of time.

renifer7

Hi all,
maybe I am not understanding this correctly but this not helping me either: https://www.myfirsthome.org.uk/wp-content/uploads/2016/12/CUSTINFO-Approved-29Nov2016.pdf

With London HTB, how and when can I potentially decide to pay off the HTB loan? Does it have to be 20% and 20%? or can it be 5% and 35% for example?
Thanks in advance.