Fixed term ending Nov-23 on help to buy mortgage

renegade1

Hi,

Are there any help to buy experts here 

I took out a help to buy mortgage in Q4 2018 on a 5 year fix at 2.24% which is ending Q4 2023.

My plan was to add the HTB loan to the mortgage when the fixed rate term ends (salary has increased a bit since then so should be possible) however I'm now reconsidering doing this as interest rates are skyrocketing and by the time I remortgage could be around 4.5%. Would it be better to delay repaying the help to buy loan for another couple of years as the interest paid on the loan will be much less than the main mortgage? i.e 1.75% vs 4.5% (forecasted Q4 2023). My monthly payments work out to be £250 cheaper including interest paid on the help to buy loan.

So is this a good plan? Just remortgage on a 2 year fix while also start paying interest on the loan (albeit at only 1.75%) I'm hoping by the end of this period interest rates would have back fallen down, and then I can add the loan to the mortgage (Q4 2025)

Thanks!

simon_or

With rates where they are now, I would do the same as you. Not only do I get the benefit of rates that are a lot lower than mortgage market rates, I also get the government to share the risk (and rewards ofc) of house price movements.

chanz4

we road help to buy out, been paying interest for 4 years its lots cheaper than on your mortgage

dimbo61

Debt is debt.
The days of cheap debt are over.
So if you can't afford to buy out the help to buy loan carry on with a remortgage of your existing debt and pay interest on the help to buy loan.
However if you can overpay each month you will build up equity in your home and help get a better rate for all the debt when you do decide to incorporate the HTB loan into your mortgage.

chanz4

just under 1k to pay off help to buy also

renegade1

Thanks all for the responses. I've decided to overpay 10% on the mortgage and then another 10% next year before the fixed rate term ends. This will lesson the shock a bit when the interest rates change. I'm then going to go for a 2 year fixed while also start paying interest on the help to buy loan. I could add the loan to the mortgage at this point but I don't think this is a good idea given things are likely to look better 2 years later. Also it's forecasted that house prices aren't going to move by much during this time so hopefully the loan won't increase by much. I'll also benefit from paying low interest on the loan (1.75% then 1.85%-2%) first two years compared to if I add it to the mortgage (4.5+%).

I'm assuming here that mortgage interest rates Q4 2025 will be better than they are now! At this point I will add the loan to the mortgage.