Help To Buy advise, 2022

ryno1

Hi, I’m new here and I’d really appreciate some advise 

Im a first time buyer in london, buying alone after coming out of a long relationship. 

I’ve reserved a flat I like (£500 fee) off plan, ready in December. 

I have managed to save an £80k deposit over the past 12 years, and with help to buy coming to an end, I wanted to explore it as it would enable me to buy a 2 bed, which is what I’m in currently. 

I know about the new build premium, and fact that Interest on the equity loan is due from year 6, but I have a childhood friend moving to london next year, 2 months after it’s ready to move into, and he would rent the other room (informally, no contract), and pay half of the mortgage, council tax and service charge)

I have an agreement on principle for £280,000

£80,000 deposit

Help to buy equity loan of £214,000 (40%)

The 2 bed flat is £535k, for 770sq feet in a good area. 

These are the fees I’ve been paying for the last 8 years:

 £550 a month rent
(My ex paid the other £550)

£67 a month council tax (half)

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My new monthly costs I estimate to be around:

£550 mortgage (once friend pays the other half) - fixed rate. 

£145 council tax(!) Each

£92 service charge. 0 ground rent. 

This makes it £170 more than renting (due to service charge and extra council tax), but should be much cheaper to run (currently in old badly insulated place, EPC almost F!


Now onto my main concern. 

If I wanted to sell within 3-5 years, and pay off the full equity loan upon sale, I’m aware that the amount payable back to the government is 40% (borrowed amount) OF the amount the property sells for OR amount it’s valued at. 

My big worry is they value it at, for example, the original price after 3 years (£535,000), but I’m only getting offers for like £480,000. This would mean I would be paying the government the £214k they lent me (40% of 535,000), but only getting £480k for the flat.
if that happened, I would have lost half of my deposit I’ve spent my working life saving. 

I don’t have any doubts I can afford the monthly payment during that first 5 years, and I hear people remortgage are Year 5, having built up equity in the property. 

The kind of work I do, I may well receive the odd £20k lump sum for a freelance project, which I could use to overpay the mortgage and increase my equity. 

Hope this all makes sense and somebody has some insight or ideas / advise. 

My current thinking is that as long as I don’t lose money at the selling process, due to it being overvalued, I will be much better off than renting as each month, I would be paying off £1100 from a £241k mortgage and getting a good rate due to good LTV. 

Flat would half my commute time and is in a very nice new development surrounded by nature but 12 minutes from central london by train