First Time Buyer Considering Using HTB

Mike17

Hi all,

I'm a first time buyer who is currently looking to purchase my first home. I've been looking into this and have read over the help to buy scheme but I'm torn if I should use this so just looking for some advice really.

The house I'm looking at is £194,000 which is a three bed semi detached property. I'll be buying this on my own. I earn around 40k per year and am looking at putting a deposit down of around 12-15k.

I understand after year 5 I'll have to make interest payments on the help to buy loan. No one can predict the future but the idea I had was to remortgage the help to buy loan into my mortgage in full. Has anyone ever done this?

I've worked out the mortgage using online calculators and I'll get a mortgage for the amount needed as I've had a previous agreement in principle.

I understand that I could pay increments of 10% off the help to buy loan but this would be costly with solicitor fee's factored in etc so I would hope to remortgage it all in one go.

Does this seem like a sensible idea or not?

Thanks for your time reading this,
Mike.

kingstreet

Affordability for HTB on a newbuild sees you able to borrow less as the future cost of the HTB loan has to be taken into account, normally at 3%, as do things like ground rent/service charges.

You also need to pass the HTB affordability calculator.

https://www.gov.uk/government/publications/homes-england-help-to-buy-equity-loan-calculator-and-guidance

It's 10% of the property value which can be repaid at a time, not 10% of the loan.

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

It may be possible to consolidate the loan, subject to property value, status, affordability etc.

Mike17

Thanks so much for the reply. Part of me thinks that the scheme is a good idea as it'll allow me to purchase the property I want. I'm just trying to work out my options now so I have a full plan of what to do after the interest free period ends.

As I understand it I would need to pay for a RICS valuation and then instruct a solicitor to pay off 20% of the HTB loan, which will be 20% of the property value whenever I decide to repay it.
I wouldn't want to go down the staircasing route as I think it would work out too expensive to keep paying 10% chunks off with solicitor fee's etc.

I've never read of anyone successfully remortgaging the the 20% into a standard mortgage, most people from what I've read tend to sell up?

Mike.