Advice for paying back help to buy loan

james_uk

Hi, I was hoping someone would be able to give advice for starting to pay back the help to buy after the first 5 years.

We feel like we really didn't get told what would happen and the cost of what it would entail when it comes to paying it back and has come as a bit of a surprise now that the time
has come. We have lived in our current house coming up to 5 years at the end of this June. So out mortgage is now due for renewal and have been given the option to take a deal without paying the help to buy and an option to include it.

We thought or assumed that from what we got told when we moved in that the help to buy loan just gets added after the 5th year and assumed this was just default that you started paying it after then, we didn't know there’s an option to not start paying it yet, but if we don't do we get penalised even more later?

We have spoken briefly about the fact we may even look to move at some point as my partner isn't that keen on the area now, so with that in mind would it not be a good idea starting to pay the loan back as i think if you sell you just take a hit of 20% of the sale, is that correct?

The other thing that wasn't made clear to us was that now we need to start looking at paying the loan we have been told that if we do decide to start paying it back there appears to be a lot of initial cost involved is that correct?

We have been told now that there would be 3 costs involved in this which are:

1. RICS certified Surveyor to get an exact value of the house.
2. Target HCA (Who run Help to buy) a £200 admin fee.

3. Solicitor fee's

Does all that sound correct?

If so how much would i be looking at spending as an average cost of all of the above, i really am not sure how much to expect to pay for the solicitor fee's and Surveyor fee's.

Would i be right in assuming i then have to go this same process each time the current mortgage deal ends as they said when paying the help to buy it has to be based on the current value of the house, well if i took another 5 year deal in 5 years we wouldn't know what the value is without getting it valued would we?  So do we have to pay all 3 charged again when renewing the 2nd time and so on..?

I am sorry if there are a lot of points and questions within the above but if anyone can help that would be great.

Regards

James

dimbo61

So did you get a 20% HTB loan or do you live in London and have a 40% HTB loan ?
A rics survey is about £350/500 and the Solicitors costs about £500/700 as your  not buying the home you live in just buying the Government share ! 20/40%
You don't need to pay for the survey, Target fee or legals  ( Solicitor costs) until you are buying the htb loan out.
You now need to look at the big picture ?
1.Do you want to carry on with your current mortgage lender and apply for a new deal online and also pay interest on the HTB loan at 1.75% in the first year which goes up by the Consumer price index plus 2%
2 Do you want to pay off the HTB loan and own your home with a new bigger mortgage ? This depends on what equity you have built up and income, age, credit score etc
I think it will be easier if you can afford to pay off the HTB loan and own your home.
Maybe talk to your partner before signing up to a new fixed rate deal.

james_uk

Hi, thank you for your reply.

Ours is a 20% loan. Was the info wrong we were given that if we want to start paying the HTB loan off we would have to pay for all them things, is it only at the end when you come to finish it are you saying?

Amy32

james_uk said:

Hi, thank you for your reply.

Ours is a 20% loan. Was the info wrong we were given that if we want to start paying the HTB loan off we would have to pay for all them things, is it only at the end when you come to finish it are you saying?

You will have to pay for these things at each stage in paying it back. You can only pay back a minimum of 10% at a time so you could choose to do it in 2 instalments but that would mean 2 lots of valuations etc if that makes sense? 

james_uk

Thanks for your reply Amy, i feel like none of this was mentioned to us when we moved in

We really thought that the HTB loan just gets added on to the mortgage and it will just be a little more and thats basically it, we didn't expect that there would be the surveyor, solicitor and admin fee's each time we come to renew the mortgage.

We do not have the money to pay off the loan in full or half so would have to do it via the mortgage monthly, my partner was starting to set her sights on moving but from what i have read giving that the property has only gone up a little bit in value and we do not have the spare money, i am guessing we will find it very hard?

We got some quotes to renew with HTB included and there was 3 options a 2 year, 3 year and 5 year, the 2 year included £500 cashback but the other 2 didn't, this of cause would help with fee's but i assume this may not be a good option longer term as in 2 years time we would be in the same boat and have to renew again and im guessing pay for solicitor, surveyor and HTB admin fee's again which on looking might all be around £1000 or more to pay? I am guessing based on that its generally cheaper in the lonn run to take the longest  fixed deal possible?

Amy32

james_uk said:

Thanks for your reply Amy, i feel like none of this was mentioned to us when we moved in

We really thought that the HTB loan just gets added on to the mortgage and it will just be a little more and thats basically it, we didn't expect that there would be the surveyor, solicitor and admin fee's each time we come to renew the mortgage.

We do not have the money to pay off the loan in full or half so would have to do it via the mortgage monthly, my partner was starting to set her sights on moving but from what i have read giving that the property has only gone up a little bit in value and we do not have the spare money, i am guessing we will find it very hard?

We got some quotes to renew with HTB included and there was 3 options a 2 year, 3 year and 5 year, the 2 year included £500 cashback but the other 2 didn't, this of cause would help with fee's but i assume this may not be a good option longer term as in 2 years time we would be in the same boat and have to renew again and im guessing pay for solicitor, surveyor and HTB admin fee's again which on looking might all be around £1000 or more to pay? I am guessing based on that its generally cheaper in the lonn run to take the longest  fixed deal possible?

Did you put a 5% deposit in or more than that? I would talk to a mortgage broker and see what they suggest. 

I don’t think the fee is £200 for remortgaging without paying back loan, I think it’s £115. You also don’t need another valuation each time (apart from your mortgage lender valuation as you would anyway), you only need to get a RICS valuation if you are paying back the loan.... I think that is correct anyway but I could be wrong, this is only because we have recently gone through a help to buy application and moved in. 

getmore4less

Did you not read the H2B information packs  they  explains what happens reasonably well.

Who do you think should have explained everything?

H2B  have you for 20% of the value of the property

you basically have 2 choices pay it back or not   

Paying back can be 1 or 2 stages and needs those fees each time there is no start paying it back it is 100% or 50% of the 20%.

if you pay it off by increasing your mortgage that can effect the LTV etc so you need to look at the rates.

the other option is not pay any back and just start paying the interest charges on that loan.

that should not need any extra fees unless Target keep their nose in the trough to approve retention deals.

Choice of fixed term or maybe other option with No ERC if the lender has them for H2B  willdepend on when you plan to move.

If you add the H2B to your mortgage pay a few fess what sort of LTV will you be at and what rates are you getting offered?

james_uk

Hi, without paying the HTB we was offered:

1. Property Value - £225,163 (Nationwide’s estimation)
2. Current Balance - £121,791
3. Remaining Mortgage Term – Capital & Interest repayment over 25 years & 3 months
4. Current Rate – 2.94% fixed until 30/06/2021
5. Monthly Payments – £571.08 whilst fixed

 

Nationwide 2 year fixed rate

1. 1.49% fixed for 2 years
2. Arrangement fee – none
3. Valuation fee – none
4. Cashback – none
5. Overpayments of up to 10% of the outstanding mortgage balance each year without penalty
6. Monthly Payments - £483.86 whilst fixed

 

Nationwide 3 year fixed rate

1. 1.59% fixed for 3 years
2. Arrangement fee – none
3. Valuation fee – none
4. Cashback – none
5. Overpayments of up to 10% of the outstanding mortgage balance each year without penalty
6. Monthly Payments - £489.60 whilst fixed

 

Nationwide 5 year fixed rate

1. 1.24% fixed for 5 years
2. Arrangement fee – £999 (can be added to the mortgage)
3. Valuation fee – none
4. Cashback – none
5. Overpayments of up to 10% of the outstanding mortgage balance each year without penalty
6. Monthly Payments - £472.35 (£476.22 with the arrangement fee added) whilst fixed

With paying HTB we was offered:

1. Property Value - £210,000 (estimation)
2. Current Balance - £163,791 (current balance plus 205 of the valuation to repay Help to Buy)
3. Remaining Mortgage Term – Capital & Interest repayment over 25 years

 

Accord Mortgages 2 year fixed rate

1. 2.39% fixed until 30/06/2023
2. Arrangement fee – £495 (can be added to the mortgage)
3. Valuation fee – none
4. Cashback – £500 (paid to you after the new mortgage begins)
5. Overpayments of up to 10% of the outstanding mortgage balance each year without penalty
6. Monthly Payments - £725.75 (£727.95 with the arrangement fee added) whilst fixed

 

Leeds Building Society 3 year fixed rate

1. 1.99% fixed until 31/05/2024

1. Arrangement fee – £999 (can be added to the mortgage)
2. Valuation fee – none
3. Cashback – none
4. Overpayments of up to 10% of the outstanding mortgage balance each year without penalty
5. Monthly Payments - £693.44 (£697.67 with the arrangement fee added) whilst fixed

 

Leeds Building Society 5 year fixed rate

1. 2.34% fixed until 31/05/2026

1. Arrangement fee – none
2. Valuation fee – none
3. Cashback – none
4. Overpayments of up to 10% of the outstanding mortgage balance each year without penalty
5. Monthly Payments - £721.67 (£721.67 with the arrangement fee added) whilst fixed

Sorry about the size of the post, i tried to take away all the spaces inbetween each line but wouldn't for some reason.

sharp910sh

If you can afford to get a bigger mortgage to pay off the HTB, I would. I would get the 3 year fixed at 1.99% with Leeds. Seems like a good deal. What are you planning on doing?

amnblog

If Nationwide value the property at £225,000 where did the £210,000 valuation come from on the figures buying the 20% out of the help to buy scheme.
It seems to me you have a couple of bigger questions here
1. If your partner does not like the area are you going to move?
2. Where are values going in your area. If they are rising fast there is value in buying out the 20% equity. If they are static or dropping you are better off leaving the equity as it is so you are only carrying 80% of the risk.

dimbo61

It is much easier selling 100% of a property.
Well done on building up the equity in the property so far.
You are at 60% LTV 
If you can afford to buy the other 20% from the HTB / Target I would.
Your mortgage would be about £160/170,000 on a £225,000 property so maybe 75% LTV.
You will only end up with a new mortgage and a loan at 1.75% and going up each year.I