Help to buy repayments

valenathan

Hi all,

I’m approaching the 6th year of my help to buy equity loan. I’m wondering if the changes in inflation or rising interest rates will have any impact on my future payments?

I understand I’ll pay 1.75% of my £28k loan this coming year, but the below confuses me for year 7 onwards;

The interest rate increases every year in April, by adding the Consumer Price Index (CPI) plus 2%.

many thanks!

K_S

valenathan said:

Hi all,

I’m approaching the 6th year of my help to buy equity loan. I’m wondering if the changes in inflation or rising interest rates will have any impact on my future payments?

I understand I’ll pay 1.75% of my £28k loan this coming year, but the below confuses me for year 7 onwards;

The interest rate increases every year in April, by adding the Consumer Price Index (CPI) plus 2%.

many thanks!

@valenathan The interest rate is uprated by (CPI+2%). So if CPI is 10%, the interest rate will go up by 12% of the previous year's interest rate. In year 7 that would be : 1.75% x 1.12 = 1.96%

In subsequent years, even if you assumed a worst case scenario of CPI running at 10% every year, you'd still only be paying a 2.75% interest rate in year 10, a fixed rate that you can't probably get for your mortgage right now. 

valenathan

K_S said:

valenathan said:

Hi all,

I’m approaching the 6th year of my help to buy equity loan. I’m wondering if the changes in inflation or rising interest rates will have any impact on my future payments?

I understand I’ll pay 1.75% of my £28k loan this coming year, but the below confuses me for year 7 onwards;

The interest rate increases every year in April, by adding the Consumer Price Index (CPI) plus 2%.

many thanks!

@valenathan The interest rate is uprated by (CPI+2%). So if CPI is 10%, the interest rate will go up by 12% of the previous year's interest rate. In year 7 that would be : 1.75% x 1.12 = 1.96%

In subsequent years, even if you assumed a worst case scenario of CPI running at 10% every year, you'd still only be paying a 2.75% interest rate in year 10, a fixed rate that you can't probably get for your mortgage right now. 

That’s great, thank you!