Advice on using h2b isa on new home

sufcboy

So we’re planning on buying a new build house at around £160,000 and we are going to be using the governments h2b equity loan as well as the h2b isa. Currently have more than the 5% deposit needed, just wondering is it worth still saving into it or is it pointless?
Are we better off putting more than the 5% down (+25% gov) or are we better just putting the 5% down and then using the rest on other things.

Cakeguts

You would be better off not using the government's H2B equity loan at all and saving for a 10% deposit.

sufcboy

Thanks for the reply.
What makes you say that?

csgohan4

new builds are over priced usually and the quality are often poor,

[Deleted User]

Paying the extra bit each month on a 5% deal will work out better in the long run if you are in area where house prices are likely to go up.

Rates have been coming down and down so why are you using htb equity loan?

RE the htb is a, of course keep saying in to it. It's all free money when your purchase completes

Yalpsmol

Keep saving in the HTB. Do not exchange until your solicitor has told you everything is sorted with it (!!). It is very common for there to be delays getting the bonus paid and it cannot be paid at any other time than completion). But its free money. Take it!

alex_163163

I’d suggest that if you can put more than 5% down as a deposit then do it. And subsequently decrease the amount of HTB equity loan you take out. You don’t have to take the full 20%
That is assuming you already have the funds saved for fees, etc.
Either way definitely still keep saving as then you will get more bonus is free money!

sufcboy

So you don’t have to take the full 20% of the government loan? You can just take 10% for example.
Also is it easy enough to remortgage after the first 5 years to pay off the government loan or do we run the risk of running into negative equity?.

Additionally can you start to pay off the government loan each month in the first 5 years so theirs not as much to remortgage?

alex_163163

Yes you can take out a lower amount than 20%. The lower the % you take out, the less you’ll have to pay back. I took out 13% equity loan on my first purchase.
I can’t answer about remortgaging as I sold the property before I needed to do that.
The minimum amount you can staircase at one time is 10% of the market value of the property. You can only redeem in multiples of 10%.
You can’t pay the equity loan back monthly.