End of Help to Buy Interest-free period - What to do?

Mojca799

Ahoy there...

Just wondering, of those who have already passed the 5-year interest free period or are coming up to it, what did you/are you planning on doing with your Help to Buy equity loan? Remortgage to incorporate; paid 100% by saving; Paid 50% off and saving for the rest; started paying the interest until you can incorporate/pay off, any other options....??

Would be great to get an idea of the split and the best options given the current situation - Target/banks not doing valuations at the present time, etc...

Stay safe,
M

[Deleted User]

My partner and his ex just started paying the interest as was the least expensive way and the 20% will be taken from the eventual sale price. 

I can see merit in trying to remortgage to absorb the 20% into a normal mortgage as those rates seem better. 

I might wait though to see what happens with house prices because if they drop your 20% will be less to take on ? 

[Deleted User]

Best case scenario the property market absolutely tanks in the next few months. You can then get your 20% at a bargain price and then sit for a few years for the revival and sell for a higher price.
Target will start doing vals again soon enough. As soon as restrictions on entering someone elses house who isnt immediate family are lifted then the valuations can resume

Mojca799

Yes, that seems to be the biggest question at the moment, doesn't it - what will the housing market look like when this is over.... and how long will it take to stabilise. 

all sorts of variables are going to be affected - Equity, LTV ratios, rates, the loan amounts themselves...

uptown20

We took out additional borrowing in January to pay off the full 20%. Got a good valuation that meant we only paid an additional £500 than we borrowed and then sold it (in theory - going through at the moment so it could all go sour) for £15k more so banked around an extra £3k.

Mojca799

Any mathematicians  out there work out what the best scenario is here: There are various reasons for only looking at 5 yr deals and also wanting to incorporate the full amount vs 50%...

Original Loan: 64K
Original Rate: 3.13%
Original HP: £320K
Current Mortgage Payment: £942
Current House Price: Before lockdown, maybe 15% rise..
Assumed Loan amount to repay: ~£74K

Switch and ride the interest (5yrs)
Offered Switch Deal: 1.5% (£758 p/m)
HTB Interest (will fluctuate slightly in the next 5 Yrs): Assume £100 p/m average
Charges: £1000 switch fee
Able to save/Overpay: up to £500 p/m
House Price in 5 years: Who the hell knows
Loan amount to repay: ??

Remortgage and Incorporate (5yrs)
Offered Switch Deal: Unknown maybe +2% (~£1100 p/m)
HTB Interest payment: £0
Charges: £1000 switching fee + Target valuation fee + Mortgage Valuation fee + Solicitors Fee
Able to save/Overpay: up to £200
House Price in 5 years: Who the hell knows
Loan amount to replay:N/A

Switch (5yrs) and 'borrow more' in 2yrs time for 3yrs
Offered Switch Deal: 1.5% (£758 p/m)
HTB Interest (will fluctuate slightly in the next 5 Yrs): Assume £100 p/m average
Charges: £1000 switch fee
Able to save/Overpay: up to £500 p/m
Borrow more cost (~£280 p/m)
House Price in 2 years: Who the hell knows
Loan amount to repay: ??

any other options?

Mojca799

Bump.

Would love to hear someone else's opinion on what to do

Ta

EverythingIWant

For me I worked it out that I could take a 2 year deal followed by a 5 year deal and then remortgage at the 7 year point to clear the H2B loan.. that seemed to be fairly cheap.. now with covid and mortgage issues, if house prices go down I may try and settle the H2B after only 2 years with it (June)

Thrugelmir

Overpay the mortgage and allow time for the property market to settle. The H2B loan could well reduce at some point. You can always add an additional loan to the mortgage with your current lender at a later date, i.e. have 2 sub accounts. 

funkyfin2000

This is similar to what I've just posted as well. Similar situation now and trying to work out what's best.

getmore4less

I did the calculations a while back for HTB and how much house peices needed to go up to be worse off , thet a was for a 95% against 75% HTB.

You can do the same with your options to work out breakeven points.

not looked to see if you have provided enough information.