Help To Buy Loan - what happens when it's due.

homeless9

Hi,

In a few years time I will be due to pay off the Help To Buy loan of £30,000 that I borrowed to purchase my new build home.

If I am lucky I may be able to pay this off in full with cash, but what happens if I can't....

What is the process of adding all or part of this £30,000 Help To Buy loan to my mortgage....

Will the bank who I have my mortgage with want to check my income again to see if I can afford this extra £30,000 addition to the mortgage? or is it possible they'd just add it to my mortgage with no questions asked?....

One thing I have started doing is making a £100 extra overpayment each month on my mortgage which is 28% more per month than I have to pay so I am wondering if the bank would see this and take it into consideration when deciding whether to check my income again or not.

I ask these questions as my income has gone down since buying my property. This isn't an issue for me in terms of finances, I am very comfortable with paying my outgoings each month and have a decent amount of savings. I am just curious if I'll need to increase my income in a few years time if it is the case that the bank requires me to provide evidence of earnings if I was to add all or part of this £30k to my mortgage.

Alternatively, if the bank requires payslips and I don't think I'll be earning more in a few years time then I may have to reconsider the £100 overpayments and instead keep them as savings to pay off as much of the Help To Buy loan as possible when it is due.

or..... is it just simpler to pay off the Help To Buy loan as and when I can directly through the scheme with the 1.75% interest rate that will come in once the 5 years has passed?

Thanks.

MovingForwards

It's a % of the current property value, not what you borrowed.

You would either pay it off in cash or remortgage to clear it. Affordability would be looked into, same as when you first applied for the mortgage.

Personal preference for clearing or keeping it running and you'll have to see where you're at about 6 months before hand. 

All the information should be in your original H2B paperwork.

Edit to add link:
https://www.gov.uk/government/publications/repay-your-help-to-buy-equity-loan

amnblog

You do not need to pay off your equity loan at the end of year 5. 

As you have stated, you can keep it in place and pay interest monthly.

If you do intend to repay the loan you can pay it off it full, or in two payments of 10% of the property value.

If you look to borrow extra on your mortgage to repay your equity loan your mortgage lender will recheck your income, your credit history, and the property value.

The key question when repaying the equity loan is where is the value of the property going. If the property value is increasing it makes sense to buy out the equity loan. If the property value is decreasing it may make sense not to buy out the equity loan.

chanz4

Going to cost around 1k also to pay it off