Help to Buy Equity Loan - Scandal

JimmyDC

I just outlined exactly what I was grumbling about. The fact we can’t pay it back in Increments.

What are you contributing to the conversation other than voicing your opinion of which I’m not interested?

Slithery

JimmyDC wrote: »

What are you contributing to the conversation other than voicing your opinion of which I’m not interested?

This is a public forum - it doesn't matter whether or not you're interested. All of the replies so far will be useful for future users with the same question.

Parking_Eyerate

How do you envisage paying a % loan incrementally would work, out of interest? A property’s value can potentially change quite constantly, certainly quarter by quarter, so who would pay for updated valuations every time an incremental payment was to be made?

da_rule

JimmyDC wrote: »

I just outlined exactly what I was grumbling about. The fact we can’t pay it back in Increments.

You can. If you took the full 20% you can pay back half of the loan (i.e. 10% of the property value).

All literature I have seen on HTB makes it perfectly clear that you pay back the relevant % of the property value as of the date you make the repayment (either by selling the property or paying it off).

Have you considered extending your mortgage to repay the balance (as you mentioned you have savings, it may not be that much extra)?

I fail to see how it's a 'scam'. The government provided you with a (fairly large) loan, with no interest, for 5 years. They ran the risk that if the property market took a dive they could lose out (they could have included a clause that you have to at least pay back the amount you borrowed, but they didn't).

[Deleted User]

JimmyDC wrote: »

I just outlined exactly what I was grumbling about. The fact we can’t pay it back in Increments.

What are you contributing to the conversation other than voicing your opinion of which I’m not interested?

First you were complaining because the value of your house has risen and you had no idea what a 20% equity loan meant. Now you are complaining that you can't repay the equity loan in increments even though you can staircase your repayments.

If you're not interested in reading people's opinions then don't post on a public forum and read your paperwork. Simple.

asm89

If you've been saving, and are really worried about the prices increasing even further leading to this "huge monthly payment", have you considered re-mortgaging now (if you aren't locked into a 5 year deal)?

Most people with HTB plan to remortgage to pay it off, as saving up 34k or even 68k if we use the 40% HTB available in London, is not realistic for most people in 5 years.

Also new builds are hugely overpriced, so your house's value may not actually have risen as much as you assume. You won't know until it's valued.

GDB2222

JimmyDC wrote: »

I take your point in reading the contracts fully, but have you every read the entire T's & C's of everything you sign and did you fully understand each article? I understood I was borrowing money and that there would be interest, I misunderstood that the percentage increased with the house value.

I admit that I didn't read the entire T&Cs when I signed up to this website. Nor, would I do so if buying a can of beans from Tesco.

But you borrowed tens of thousands of Pounds from the HTB scheme. Surely, anybody with an ounce of common sense would read and fully understand the terms of the scheme?

AnotherJoe

JimmyDC wrote: »

I feel like it's a huge scandal and massive scam from the government to take advantage of first time buyers and young people who have no other options. House prices are not going to go down! I think it'd have been better to get a 95% loan and the only option I can see is to remortgage in 2 years, when the prices will have risen even more, and end up with a massive monthly payment...

I know I'm not the only one who feels this way and I think we need to make some noise about it!

What can I do and what are everyone's thoughts?

Kentish_Dave

JimmyDC wrote: »

Hello. Well, this seems to have started a storm.

Thanks for your replies, it seems that the majority believe that Help to Buy equity is perfectly fine and that it's ok for the government to profit from us. I'd be interested to know if that was your view on other matters that directly affect you.

It generally is, yes. The government did you a big favour by getting you into a house that you would not otherwise have been able to get into. If it was not for them you would not now be sitting on this big pot of equity, so they’ve left you hugely better off than you would otherwise have been.

In recent years the government has been rinsing people like me, to heavily subsidise you and others in a similar situation. You aren’t hard done by, you’ve really been taken care of, and it’s quite churlish to think that you can buy only part of a house, have exclusive use if it, and then get 100% of the uplift in value.

This is reminiscent of the guard in Rita Hayworth and the Shawshank Redemption, complaining about his bad luck at his lottery win being taxable.

joshp1993

I don't understand why you're so worked up about having to save thousands to pay back the government loan before the end of the 5 years to avoid interest - if you'd taken a 95% LTV as you said you wished you had, you'd be paying the bank interest instead and would've been paying it for the last 5 years? You would also be paying this interest on the entire loan at a much higher rate than with the 75% LTV deal you've gotten through the HTB scheme.

If you do not want to pay the interest in 2 years time then just remortgage and buy it out - but you'll do well to find many mortgage deals which will give a lower rate than 1.75% (the starting rate for the HTB loan).

Regarding the contract, I'm very close to completing on a new build via the HTB scheme and I read every legal document cover to cover, several times. Buying a house is one of the biggest transactions you'll ever make, to not read what you're signing is naive at best.