Should I pay money off mortgage or help to buy loan?

Goldie807

Hi, I purchased my 1st house 3 and a half years ago for 230,000. Looking at sites like Zoopla it is saying the price of the house is now roughly 300,000, when I purchased the house I did the help to buy scheme where I paid 5% and the government paid 20% for the deposit. I understand after 5 years so in 18 months time, I will have to start paying interest on this, my question is, with money I have saved is it better to put it into the mortgage now or keep saving it to try and take a chunk out of the loan in 18 months? I won't be anywhere near the sum I owe but hopefully I can remortgage and put that money against it aswell

lee111s

£70k in 3 years on a new build?

Interesting.

You are aware you can remortgage and take out a larger mortgage to pay off the loan, but will need to pay them back 20% of the current value of the house, not the amount you borrowed, right?

csgohan4

Zoopla is a guestimate, you will only know when the lender does a valuation

Goldie807

It was on Zoopla guess, I haven't actually had it valued, yes I'm aware of having to pay the 20% Of the current value of the property, would it be better to start chipping away at my mortgage now to get it lower or saving that money and putting it against the help to buy loan when I remortgage?

kingstreet

What's the mortgage rate v the net savings rate?

dimbo61

Well you need to read your mortgage terms and conditions or call the mortgage lenders call centre and ask can you overpay your mortgage.
Most allow 10% overpayment each year.
If your earning say 1.4% in a cash ISA but paying 2.5/3% on your mortgage then it makes sense to pay off 10% now.
In 18 months you can see what mortgage deals are available and if Lenders will loan you the money you need to pay off the existing debt and the 20% HTB loan.
This will depend on your income and outstanding debts

LMS94

Put it towards your HTB loan.

After all, your mortgage is a decreasing debt.. your HTB is a (probably) increasing debt.

Even if you pay 10% off the HTB now that will only leave 10% to remortgage.

Just be aware of the costs involved of paying part of the HTB (£200 valuation & £200 processing fee I think).

dimbo61

If you have a 20% Help to Buy loan I think you can pay off 10% at a time but WHY would you do this now !
Your not paying an Interest for the first 5 years on the HTB loan. Your paying interest daily on the mortgage.
Why would you pay fees Twice !
Why not pay off as much of the mortgage debt as possible over the 5 years and then remortgage the whole debt HTB loan and outstanding mortgage debt into one new mortgage.

kingstreet

LMS94 wrote: »

Put it towards your HTB loan.

After all, your mortgage is a decreasing debt.. your HTB is a (probably) increasing debt.

Even if you pay 10% off the HTB now that will only leave 10% to remortgage.

Just be aware of the costs involved of paying part of the HTB (£200 valuation & £200 processing fee I think).

I don't think the OP has access to £30k now to repay half the HTB EL.

Saving money on the drip v overpaying the mortgage on the drip appear to be the options.

Goldie807

Thanks for all your replies, I have been a bit lost on the subject really over what to do. I do not currently have half of the help to buy loan saved, but still have some savings that I could put against the mortgage now to lower it, when the time comes to remortgage I will be looking to put the HTB loan onto the mortgage, just in the mean time I was lost on wether to pay money of the mortgage now or wait until the that time.