Help to buy repayment (20% gov equity loan)

kitty_kins

Evening all

Been a long while since I was on here!

We bought our house back in 2014 using the HTB scheme, we put down a deposit of £12,500, got a government loan of £50,000 and have a mortgage for the rest. Currently we’re on a fixed rate of 2.19% ending in June this year.

Now that we are past the 5 year mark, we’re paying interest on the £50,000 which is around £70 a month. If we decide to move, we would pay 20% of the house value, which would be around £60,000.

I’m wondering whether this is the best course of action (assuming we move in the next year and the house sells for £300k like it’s identical friends) or whether it’s worth discussing adding the loan to our current mortgage?

Totally clueless here, so ANY input would be appreciated

Thank you!

Whats_your_forte

Worth finding out the true value of the property.

Over the last 18 months, I've dealt with a lot of people coming out of the scheme on the basis that the value of their properties has slightly cooled off in these months meaning they are now looking at a lower figure to come out of the scheme altogether.

As part of the process, they will ask for an independent survey to be done so if this was to come back favourably, then worth the serious conversation of coming out of the scheme and having full ownership even though you may see initial payments increase the monthly basis. Always worth bearing in mind that the payments on the HTB will also increase with inflation

Celes

Whats_your_forte wrote: »

Worth finding out the true value of the property.

Over the last 18 months, I've dealt with a lot of people coming out of the scheme on the basis that the value of their properties has slightly cooled off in these months meaning they are now looking at a lower figure to come out of the scheme altogether.

As part of the process, they will ask for an independent survey to be done so if this was to come back favourably, then worth the serious conversation of coming out of the scheme and having full ownership even though you may see initial payments increase the monthly basis. Always worth bearing in mind that the payments on the HTB will also increase with inflation

Interesting thread. I'm about to start a H2B scheme and debating the best way of doing it, and what to do if the value does in fact go down due to the new build premiums.

Are you saying here that IF the value has gone down they should get out and pay it off - and accept would also mean mortgage negative equity? Or just worth doing if it's not gone up in value but stayed the same.

Have to say also debating the pros and cons of saving for interest then paying the H2B with that versus overpaying (without charge) the mortgage as I go along so I could remortgage higher versus. Or a mixture of the two. My maths on compound interest are failing me .

Whats_your_forte

You are in effect looking at free money for the next five years and so you have to see what you can do within this period of time in order to put yourself in a position of strength come the end of the initial five years and the start of the payments. Yes, any surplus funds would be better fired off a liability that is attracting interest being the mortgage

As for the work we are doing at the moment, many clients have seen a bit of growth in the property in the first say two or three years and then a slight cooling off. At the same time, they have seen rises in their income allowing them to afford the mortgage on their own coupled with the fact that interest rates over again the last 18 months have made full ownership more attractive.

When the product was first launched, the interest rate being charged on the government element was extremely attractive. With the way interest rates have reduced, it is now on a par with what you can obtain from the open market whilst removing the inflation aspect of their payments