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Is Buying a house on the Help to Buy Equity Loan scheme worth it?
ac427
Posts: 128 Forumite
I have been thinking of buying a house using the Help to Buy Equity Loan scheme.
Am i right in thinking i'll be hit with a large bill in 5 years when i have to start paying back the Government's loan portion?
I am wondering whether it is worth it just to get on the ladder, rather than trying to raise a larger deposit.
Am i right in thinking i'll be hit with a large bill in 5 years when i have to start paying back the Government's loan portion?
I am wondering whether it is worth it just to get on the ladder, rather than trying to raise a larger deposit.
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Comments
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If im right You only pay back tbe interest on the loan which starts at aboit 1.75% but rises each year. You can pay back the loan in 10% incraments but when your mortgage ends you have to pay back the loan whatever is left0
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5 years is the interest free period. If you do not pay back the equity loan by that point then you would start paying interest on the loan. You do not pay down the loan with these payments, the loan remains 20% of the house value at the time of repayment.0
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If im right You only pay back tbe interest on the loan which starts at aboit 1.75% but rises each year.
The first five years are interest free. Year six, you will pay 1.75% on the amount borrowed. Year seven and onwards, the interest rate is linked to the Retail Price Index and will increase annually. On top of this, you'll have a monthly management fee to pay (currently £1 per month). When you come to pay the loan off, how much you will have to pay will depend on the value of the property on that day.
e.g. You take out a HTB Equity loan of 20% on a £200,000 house. The initial loan is for £40,000. You reach the point where you want to pay off the capital on this loan, and your house is now valued at £300,000. 20% of £300K is £60,000 you will have to find.
Bottom line, a nice little earner for HM Government whilst the house prices continue to rise.Any language construct that forces such insanity in this case should be abandoned without regrets. –
Erik Aronesty, 2014
Treasure the moments that you have. Savour them for as long as you can for they will never come back again.0 -
I did the calcs for a 75% HTB V 95% mortgage
https://forums.moneysavingexpert.com/showpost.php?p=76694270&postcount=18
Depends on rates I used rates of 1.95% V 3.27% both 5y fix.
To be worse off prices need to go up 40% in the 5 years.0
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