Help to Buy Equity Loan Repayments

RaulSim

I can't seem to get this information clearly anywhere, but how much do you actually pay back on the equity loan per month/annum?
Particularly, in the first 5 years.
From experience, or maybe you can decipher this information better than me.
For example, if the property is £350K / EL: 70K what would that look like each month?

grumiofoundation

First 5 years - interest free - so zero.

From Year 6 ~1.75%  so ~£100 per month

Explained (pretty clearly) in various places online e.g. link below. 
https://www.helptobuy.gov.uk/equity-loan/equity-loans/

Seashell517

I think if you sign up now there's a £1/month 'admin fee' for the first five years. (I think a lot of people didn't hand over bank details for DD at the 5 year point, so now they want them from the start.)

RaulSim

But what if you want if you want to start paying back the loan within the first five years to make use of the interest free period?
How much am I allowed to pay back each month, is there a cap? 

Seashell517

RaulSim said:

But what if you want if you want to start paying back the loan within the first five years to make use of the interest free period?
How much am I allowed to pay back each month, is there a cap? 

The payments from year 6 onwards do not clear the loan. The loan is redeemed either when you sell, when 25 years is up or when you choose to staircase (10% property value min) or redeem (full 20%). You cannot pay it back on a monthly basis.

Seashell517

Try reading this to understand how it works: https://www.moneysavingexpert.com/mortgages/help-to-buy-equity-loans/

RaulSim

@Seashell517
 Thanks for the information.
So If I have this right
- You pay nothing in the first 5 years
- From year 6 onwards you pay interest ONLY and this just continues (With increasing interest) until you either:
1. Pay 10% of the market value of the house as a part payment towards the house (and then continue doing so until completely paid off)
2. Pay off the entire amount (based on the value of the house)
3. Sell the house
Have I got the gist? 

Seashell517

RaulSim said:

@Seashell517
 Thanks for the information.
So If I have this right
- You pay nothing in the first 5 years
- From year 6 onwards you pay interest ONLY and this just continues (With increasing interest) until you either:
1. Pay 10% of the market value of the house as a part payment towards the house (and then continue doing so until completely paid off)
2. Pay off the entire amount (based on the value of the house)
3. Sell the house
Have I got the gist? 

Yep. And you also have to pay the loan back at 25 years.

davidw123

Best thing to do if you want to pay this back early is the following;
make big overpayments on your mortgage for the first five years, rather then towards the loan as you wanted;
Remortgage at the end of the five years (we got a five year fixed like for example) and then pay off the loan in full using this excess. - you pay 0 interest and the money you would of overpaid you wanted to spend on paying back the loan anyway.

RaulSim

davidw123 said:

Best thing to do if you want to pay this back early is the following;
make big overpayments on your mortgage for the first five years, rather then towards the loan as you wanted;
Remortgage at the end of the five years (we got a five year fixed like for example) and then pay off the loan in full using this excess. - you pay 0 interest and the money you would of overpaid you wanted to spend on paying back the loan anyway.

This is a good idea.
I guess at the end of the fixed year deal (mine will be 2 years), you will asses the cost of putting the rest of it onto the mortgage, or just the interest on the EL = opting for which ever is cheaper; right? 

jmmo20

Great thread, I was wondering the same thing. I need a plan on repayment of the equity loan, and my rationale is that doing it early will be more beneficial as the chance of big increase in value within the first few years is lower than say in 25 years time.

I take there are many different mortgages but is it usual the case than repayments go towards the loan rather interests?
We already have a fairly big mortgage but can always pay a little more.