With or without HTB

Jay15

Hi all,

I am writing this thread with the hope you can help me with deciding going with or without HTB. I tried to weight the pros and cons, here are the outcomes:

With HTB:
Advantages: Need to bring less money for the deposit; Sightly lower monthly repayment ;
Downsides: Need to apply for HTB and be granted. This can take up to 12 weeks; Can not remortgage to buy-to-let and wont be able to rent out the flat; Have to start refunding the loans after five years.

Without HTB:
Advantages: No need to be granted the HTB (no need the property info form, etc...) reducing the time until the moving date; Can remortage to a buy-to-let and rent out the apartment; Less heads up in the process of the purchase;
Downsides: Need to bring another 5% deposit ; Higher monthly repayment.

I have a resource which can bring this additional 5% deposit. I feel like going without HTB will give me more flexibility if my plans change in 2-3 years time.

If you can share with me your experience and opinions, I would really appreciate.

Thanks in advance,
Jamal

csgohan4

you will likely pay more than you got from the HTB as it is based on the valuation at the time you want to pay bac


I think it's false economy and it also limits you to new builds generally and they are already overpriced as they are new

kingstreet

Limited mortgage options on newbuild flats above 85% LTV.

HTB approval takes upto four working days only.

Payments after five years are "fees" and none of the capital is repaid "on the drip."

Pay back based on value of property at time as csg4 has said.

Limited to newbuild only.

On HTB you will still have existing lender customer retention options and a few lenders who will accept a remortgage with the HTB loan in-situ. More lenders if you intend to repay HTB loan after five years.

jennhg88

If you can go without HTB then do. If you sell, HTB will want 20% (or whatever % you went for) of the new value at that time. If prices go up and you have equity you will lose some to HTB.

sal_III

You got most of your facts about the HTB equity loan wrong.

It doesn't take 12 weeks. The SLA for the initial approval which results in authorisation to proceed is 4 working days. For that you need reservation form for the new build and AIP from the Lender. Takes 15min to fill in the form online. After you have the mortgage offer it's another 3 working days for the authorisation the exchange.

The applications are more or less automatically approved if the income you filled in meets the affordability criteria, normally they don't do checks whether the figures are true.

You can remortgage with HTB equity loan, by either keeping it or borrowing more to re-pay it. In the first case you are somewhat limited in the choice of lenders, but far from impossible.

After the 5th year you don't start repaying the loan, you are only paying interests linked to RPI. The principal is only due at the end of the 25 years or at sale.

About the only thing you are correct is that you can't let the property out. If there is even a slight chance you will want to do that - better stay away from the equity loan.

All in all, if you can afford to purchase the property without HTB - do it. HTB is aimed at ppl who can't afford that.

getmore4less

HTB you get upto 20% of a property interest/rent free for 5 years
HTB you get better rate on the other amount you have to borrow
(could be the difference between 95% and 75% LTV +HTB premium).

what you loose is the equity increase on the amount you use for HTB.

work out how much the house prices have to rise to make the HTB more expensive.

Don't forget the fees when you want to do the sale or buy out the HTB loan loan

kingstreet

jennhg88 wrote: »

If you can go without HTB then do. If you sell, HTB will want 20% (or whatever % you went for) of the new value at that time. If prices go up and you have equity you will lose some to HTB.

... and if prices fall (perhaps due to having flammable cladding) you might get to pay back less (just 10% of the HTB loan you had in the first place!).

getmore4less

jennhg88 wrote: »

If you can go without HTB then do. If you sell, HTB will want 20% (or whatever % you went for) of the new value at that time. If prices go up and you have equity you will lose some to HTB.

or with a new build you delay paying for some of it for a while and pay no interest and get a lower rate on the rest while the NB premium catches up.