Help to Buy Equity Loan Repayments

RaulSim

jmmo20 said:

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.

@jmmo20
 from my understanding from year 6 of taking out the loan you pay only the interest on the loan, which doesn't contribute to the loan amount itself. If you ever want to pay it off, (which you can do at any time) you can only do so by paying 10% of it (or more in increments of 10, i.e 10/20/30% etc).
I understand that the interest payments from year 6 increases every year, but not sure if they cap it or not?

The loan amount can change, it's all based on the value of the property at that time. If the house was 250K when bought and you borrowed 50K (20%) from HTB. If at the time of repayment, the house is worth 350K, they will want you to repay 70K (20%). They will carry out a valuation if you want to pay it back to determine the price of the property.

You must pay it back by the end of your mortgage term, e.g 25 years.

davidw123 said

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.

I imagine if you opt for this that HTB will no longer have a stake in the house and the repayments are now solely to your mortgage provider with the adjusted amount.
 But I guess you would have to asses whether this is cheaper than just paying the interest and remortgaging at a later date. I assume you would need to look at whether house prices in the area are heading up or down.
Also, to remortgage (alongside many other things), you need permission from HTB.

Maybe someone with more knowledge can verify my statements, but this is what I gather from this site and newly found knowledge on the frustrating subject of home purchases, the thread and all the information needed is here:
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/948067/Homebuyers-guide-to-Help-to-Buy-Equity-Loan-2021-2023.pdf