Help to buy

benish

Hi, I realise this may have been asked elsewhere but I wanted to incorporate my own figures into the question!
I’m just after a bit of advice and guidance on a help to buy purchase, concerning paying off the equity loan at the end of year 5.

I’ve done some sums and I should have the equity to pay off the loan easily by overpaying each month, or so I think!

Purchase price: £460k
Help to buy 20% equity: £92k
My deposit: £59k
Amount to mortgage: £309k

Leeds Building society 2yr fixed HTB mortgage 1.64% over 30years: circa £1100p/m

According to MSEs overpayment calculator, at the end of year 5 the outstanding owed will be £259k, and with overpayments of £250p/m the amount would be £240k.
Let’s say, for illustration, the house price stays at £460k and my total share of the house is £368k.
If I only have £240k left to pay of £368k then I have 35% equity?
At year 5 I could remortgage and take out £90k. That’d still put me with an LTV of less than 75%?

Is my thinking correct with all of that?

(Ps I’m unable to borrow more and reduce the HTB below 20% due to not meeting the 4.5x income/debt multiple!)

Thanks
Ben

stephen.rooke

the help to buy scheme is only available on propertys upto 250k outside london and 450k inside london so wont be available on the 460k property you mentioned

benish

stephen.rooke wrote: »

the help to buy scheme is only available on propertys upto 250k outside london and 450k inside london so wont be available on the 460k property you mentioned

It’s a maximum of 600k in and out of London!

stephen.rooke

my bad, must have been looking at a wrong website

DCFC79

benish wrote: »

It’s a maximum of 600k in and out of London!

You got a link for that ?

£250k outside of London and £450k inside of London

https://www.helptobuy.gov.uk/help-to-buy-isa/who-is-eligible/

LRmortgage

That is for the HTB Isa not the HTB scheme which as has been mentioned is up to £600k purchase price.

DCFC79

LRmortgage wrote: »

That is for the HTB Isa not the HTB scheme which as has been mentioned is up to £600k purchase price.

Ok my bad, 2 different htb schemes I see.

Thrugelmir

benish wrote: »

Is my thinking correct with all of that?

Your initial mortgage product only lasts 2 years. While your plans are assuming 5 years of low interest rates. A lot could change before you refix with another product.

Stephbaker

Is it really 600k in and out of London? I had recently had talked to someone about something like this and the numbers were really different. I think I agree with DCFC79.

kingstreet

Help To Buy Equity Loan (England) provides a loan of upto 20% (40% London) of the purchase price of a newbuild priced upto £600,000.

Scotland and Wales have different limits.

A Help To Buy ISA sees a maximum purchase price of £250,000.

Yet again, HMG's decision to call everything 'Help To Buy' causes confusion.

enthusiasticsaver

It is only on new builds for up to £600k. Your reasoning is correct OP. The only caveats to your proposal is if house prices fall this may affect you ability to remortgage the full amount you need to pay off the equity loan. It might be advisable to also look at 5 year fixed deals.