Preparing for end of help to buy

suz2020

Hi we are 6 months into our help to buy mortgage. We have a 5 year fixed rate mortgage and are hoping to pay off the help to buy loan at the end of the 5 years by adding it onto our mortgage. To prepare for this we want to save up a bit of money. Just wondering if it would be better to pay extra payments each month off our Nat west mortgage or save it up in a savings account. We won’t be able to save up enough to pay off the help to buy in one lump sum but thinking anything to improve the LTV will help. Are there any disadvantages to paying it off the mortgage rather than putting it in a savings account? The main one i can see is that if it’s paid off mortgage we can’t be tempted to use the savings for anything else! 

md258

One disadvantage would be that you would be reliant on being able to remortgage to get the money back out. If you think that anything might not be as favourable mortgage wise (children/become self employed etc) in 5 years, I would go for a savings account.

Also, having the money in savings means that you could use it for other things if needed- this could be either a good or bad thing depending on your discipline. I'm guessing from your post that you would be tempted to dip into it.

My overall thoughts would be to keep it in a savings account (possibly with a different bank to your other accounts to hide it from you), but you'll need to weigh up the two options.