How to invest to prevent the H2B hammer after 5 years

tim_london

Rocksolid said:

If the property increases in value then 10% of that gain is payable to the Government. 

How did you end up to say that? Are you referring to interests? Remortgage?

What is this about?

The HTB is an equity loan which is different to a fixed loan like the bank.  With HTB you pay back the % of what you borrowed based on the property price.  So if you still owe 10% and your house price goes up then 10% of that gain belongs to the govt's.   That's why people try to staircase and pay it off as soon as they can.  

Rocksolid said:

Wait, so people when they "remortgage", do they ask also a loan in the meantime??? That's new for me...

Is this to lower the monthly payment too?

2 different things but yes, remortgage is basically a new mortgage so you can:

• Further Advance = borrow more out of the delta between what you still owe the bank and your property price.  You cannot borrow more than deposit amount, i.e. the last 15% of the property value cannot be cashed back out as loan.
• Changing the mortgage terms = Lower the mortgage term to increase the monthly payment but pay back faster.  Or increase it to lower it but obviously pay more interest over time and take longer to payback.

Rocksolid

tim_london said:

Rocksolid said:

If the property increases in value then 10% of that gain is payable to the Government. 

How did you end up to say that? Are you referring to interests? Remortgage?

What is this about?

The HTB is an equity loan which is different to a fixed loan like the bank.  With HTB you pay back the % of what you borrowed based on the property price.  So if you still owe 10% and your house price goes up then 10% of that gain belongs to the govt's.   That's why people try to staircase and pay it off as soon as they can.  

Rocksolid said:

Wait, so people when they "remortgage", do they ask also a loan in the meantime??? That's new for me...

Is this to lower the monthly payment too?

2 different things but yes, remortgage is basically a new mortgage so you can:

• Further Advance = borrow more out of the delta between what you still owe the bank and your property price.  You cannot borrow more than deposit amount, i.e. the last 15% of the property value cannot be cashed back out as loan.
• Changing the mortgage terms = Lower the mortgage term to increase the monthly payment but pay back faster.  Or increase it to lower it but obviously pay more interest over time and take longer to payback.

I thought the term "staircase" it was for the shared ownership scheme, but ok, I got the point in this case.

getmore4less

H2B is a shared ownership scheme.

[Deleted User]

getmore4less said:

H2B is a shared ownership scheme.

Are you sure?  I thought the buyer owns the property, 100% of it and HTB EL is just a charge against the title the same as the mortgage lender has.

getmore4less

Lover_of_Lycra said:

getmore4less said:

H2B is a shared ownership scheme.

Are you sure?  I thought the buyer owns the property, 100% of it and HTB EL is just a charge against the title the same as the mortgage lender has.

H2B is a beneficial interest in a % of the property, very different to a lender  which is just a loan of cash that you owe them.

With a mortgage you do have the beneficial interest in 100% of the property you don't with H2B.
typically just 80% when you take out a 20% H2B

Both use the property as security to stop you running off with the money. 

chanz4

when settling the loan, you have to pay solicitor costs, htb costs so budget 1k for this alone

Rocksolid

chanz4 said:

when settling the loan, you have to pay solicitor costs, htb costs so budget 1k for this alone

I opened this thread to calculate all: https://forums.moneysavingexpert.com/discussion/6187924/house-fees-in-total#latest