Help to Buy - Interest rate rise

mikedaveross

I purchased a property in December 2013 on the Help to Buy scheme.

In December 2018 I started making interest payments @ 1.75%

In Feb I receive a letter from Target (now managing the Help to Buy scheme from the Homes & Communities agency) saying my interest rate will rise in April by the RPI + 1%

Now I was pretty sure it increased annually from the anniversary of your taking out of the loan after 5 years, NOT 3 months in!

The helptobuy.gov.uk website buyers guide states...

"If you have not repaid in full your Help to Buy equity loan after five years, you will be required to pay an interest fee of 1.75% of the amount of your equity loan at the time you purchased your property, rising annually from the fifth anniversary of your equity loan by the increase (if any) in the Retail Price Index (RPI) plus 1%.

Target are telling me my interest rate rise is correct & it should state 1st April annually. Apparently the way I am interpreting it is incorrect & it is only a guide! If i had taken the loan out in April, I would have had 11 months @ the initial interest rate, if March, I would have had one month before it rose!?!

I'm sorry, but this is the official Government website Help to Buy buyers guide that many have relied on for the past 5 years in calculating their future payments.

Going forward, the very small increase now will result in bigger & bigger payments in years to come for many people...unfairly early in my view.

How many others are affected by this?!?

G_M

The website is guidance only (often wrong).


Dig out your paperwork and read the contract you signed. What does it say?

mikedaveross

I have a personal worked example document from MOAT (the south east agent) stating in year 6 the interest rate will be 1.75%. In year 7 & every year after that until the equity mortgages is paid back in full, the total interest charge is increased in RPI for the previous 12 months plus 1%. It even gives an example of if the 7th year RPI was taken from July. Nowhere can I find that it states everyone's interest rate increases from April, regardless of when they took out the loan.

I also have a paper copy of the guide stating the above in the first post, sent to me by MOAT on acceptance.

Gwendo40

As already said ''guidance only''

Help to Debt was all about reeling gullible folk in to pay more for a house than it would have otherwise been worth without the scheme.

Weren't you already aware of that?

G_M

mikedaveross wrote: »

I have a personal worked example document



...


I also have a paper copy of the guide stating the above in the first post, sent to me by MOAT on acceptance.

But what did you sign. And what did they sign?

mikedaveross

Thankyou Gwendo40 for your valuable contribution. Do you have anything of sustainable interest to add?

FYI, I negotiated a deal paying considerably less for my property thankyou.

So anything stated regarding Help to Buy on a Government website is just a guide, & can just be changed 5 years after the fact?

It not stated anywhere on any signed documentation the interest rate rises after 5 years.

G_M

mikedaveross wrote: »

It not stated anywhere on any signed documentation the interest rate rises after 5 years.

Well if the signed documenation states an interest rate of 1.75% after 5 years, and makes no mention of any increase thereafter, then you are fine.


Simply send a copy of the signed document highlighing the relevant part, and state that no proposed increase is valid.

mikedaveross

There is a forecast of interest charge in year 6, which is correct. I am not disputing that & have been paying it since December.

(although now wondering how binding anything is if it isn't stated?)

There is no mention of increase in the Help to Buy docs, other than in the guide. (which apparently, is just that...)

It IS mentioned in the summary from the solicitors once the authority to proceed had been obtained from MOAT, that interest rates will increase on the sixth anniversary of the date of the mortgage documents...not the proceeding financial year.

The cost now is negligible (£3 a month) but could potentially rise sharply with time/interest rate rises if not paid off.

It isn't that this just affects me, but the thousands of other accounts.

It seems to me the new management company of these loans have just decided to increase everyone rate as a blanket in April, as its administratively easier!

Gwendo40

mikedaveross wrote: »

Thankyou Gwendo40 for your valuable contribution. Do you have anything of sustainable interest to add?

FYI, I negotiated a deal paying considerably less for my property thankyou.

So anything stated regarding Help to Buy on a Government website is just a guide, & can just be changed 5 years after the fact?

It not stated anywhere on any signed documentation the interest rate rises after 5 years.

I suppose using the words ''sustainable interest'' in that reply was a rather ironic Freudian Slip on your part :rotfl:

Crashy_Time

Gwendo40 wrote: »

As already said ''guidance only''

Help to Debt was all about reeling gullible folk in to pay more for a house than it would have otherwise been worth without the scheme.

Weren't you already aware of that?

Good point, wonder if these schemes will be scrapped under Corbyn after the No Deal Brexit?

Newnoel

The bitter little muppets on HPC have decided this thread is one for them to pounce on:
https://www.housepricecrash.co.uk/forum/index.php?/topic/234197-help-to-debt-recipient-squealing/&tab=comments#comment-1103468625


Thankfully very few people seem to post on HPC anymore