To pay off Help To Buy or to remortgage Help To Buy

MichaelOkay

The dreaded 6th year looms and I have choices to make. I used the government's help to buy equity loan to assist with my first mortgage. It's a whopping £30,000. I realised that it's not something I can just gradually pay off bit by bit as at least 10% of the total house price (as valued at the time of payment courtesy of my money) must be paid as must be conveyance, a solicitor and £200 admin fees!!! 

I'm in a very lucky position where I may be able to pay the entire sum off in one go with my remortgage by cancelling my overpayments of £250 monthly (paying all those unbelievable fees as well as 20% house price change). 

The problem is, I'm very aware interest is live and I don't know whether it'd be more beneficial to scrap paying it in one go and pay a lump sum off my mortgage right now (£8,000 to avoid triggering overpayment charge) and simply remortgage the help to buy into the full amount and then throw another lump sum payment come the next mortgage (hopefully another 10% no charge overpayment mortgage). My current rate is 3.34% but that is my first mortgage so I'm looking optimistically for my next one.

Has anyone been in this position and able to give their view on the best option? The full calculation is very difficult and not accurate as it's all assuming similar interest rates so any wisdom would be very appreciated.

MovingForwards

A few things you haven't said are total value of property, what your equity is and your income.

MichaelOkay

MovingForwards said:

A few things you haven't said are total value of property, what your equity is and your income.

Total value at purchase £150,000, equity approx. £40,000 and income approx £27,000

airey

I don't fully understand your current circumstances but there are two key factors as to whether its worth incorporating the shared equity loan into your main mortgage at this stage. These are, the interest rate you can get on a remortgage and the current value of your property. 
With regard to interest rate, the help to buy loan approximates are 1.75% for year 6, 1.86% for year 7 and 2.08% for year 8 etc. If you can get better rates on your main mortgage it maybe better incorporating it into your main mortgage. If not it maybe better as you are and continue to over pay on the higher rate.
With regard to your property value, when you pay back the shared equity loan you pay back 20% of CURRENT value. Has your property value likely to have changed much since purchase? Nobody has a crystal ball but also worth taking into account possible future value as if your property value goes up you pay back more, if it goes down you pay back less than you borrowed.
I'd suggest speaking to a good mortgage advisor as they will be best suited to help judge your exact circumstances etc.