Honest opinions...HTB scheme or the old fashioned way?

jazzyja

so planning on buying my first home next year. Im currently saving in a LISA and im half way there! Il have approx 11-12k saved. My plan was to perhaps buy a small terraced for 110k, and in the future buy something abit bigger. Now im worried there won't be any 90% ltv either which is also making me consider the HTB scheme. A friend suggested the scheme that way I'd have a bigger deposit but when reading it does sound alot of hassle....you've basically 5 years to pay it back along side your mortgage or pay interest?? But I'd be in a house id probably stay in alot longer than the small terraced? I'm torn as to what is best option. Also could I have a LISA plus a HTB? Any advice is great thanks!

Ps it would make sense for me to get a bigger deposit but for a personal reasons I NEED to leave where I currently am within the next 12 months. I do not want to rent any longer, I already have done for 12 years. I want my own home for my children 

amnblog

Don’t get fixated on the fees from year six on the H2B loan.

The costs are relatively modest 
The scheme gives you access to lower mortgage rates
You wont be able to take on an unaffordable arrangement

A bigger consideration is whether suitable H2B properties are being built where you wish to live.

jazzyja

amnblog said:

Don’t get fixated on the fees from year six on the H2B loan.

The costs are relatively modest 
The scheme gives you access to lower mortgage rates
You wont be able to take on an unaffordable arrangement

A bigger consideration is whether suitable H2B properties are being built where you wish to live.

How is the equity loan paid back? In with your mortgage repayments? Sorry if that's a daft question.
There are some properties just near me, cheapest at £160000. So would that mean the mortgage im applying for would be 110k? (40k 25% gov and 10k from me?) 

amnblog

you need to read the details again. You get a 20% (£32,000 equity loan) to add to your £10,000 and raise £118,000 on mortgage.

you pay £1 a month for the equity loan for 60 months then £47 a month

https://www.helptobuy.gov.uk/equity-loan/equity-loans/

jazzyja

amnblog said:

you need to read the details again. You get a 20% (£32,000 equity loan) to add to your £10,000 and raise £118,000 on mortgage.

you pay £1 a month for the equity loan for 60 months then £47 a month

https://www.helptobuy.gov.uk/equity-loan/equity-loans/

Sorry yes I meant 20% id read it earlier.

So what happens when you come to sell the house and you owe all that to the gov? 

MovingForwards

You pay back the H2B at 20% of the current value of the property.

Have you read up on H2B as there's loads of information.

https://www.google.com/amp/s/www.moneyadviceservice.org.uk/en/articles/help-to-buy-schemes-faqs/amp

getmore4less

If HTB will get you into a place that you can stay longer then get one less move that can  add to the savings.

you buy 80% 
get 20% interest free for 5 years
you pay 5%
get 75% on a lower rate(~2%) than you would have paid on 90%-95%(~3%+)

after 5y you start getting charged on the 20% at rate that is quite likely to be less than the rate on the 20% if you paid it back through mortgage borrowing.

When you sell you get 80% of the value

over 5 years you will have paid off about 15% of the mortgage, 12% of house purchase.
if you paid at the rate without H2B you will have paid off 19% of the mortgage 15% of the house purchase