Old Help to Buy Equity Loan vs current one

Rony

Hi all,

So I have the original Help to buy Equity Loan (I bought my property in 2020). I have a couple years left on it before I start interest and was just curious and looking into it (forgotten the rates).

I understand that there was a new Help to Buy scheme introduced, 2021-2023 scheme. And looking at the differences, the original has 1.75% with annual increase of RPI+1%.

The new one has 1.75% plus annual increase of CPI+2%

Questions:

1) I am assuming that I will still be on the old scheme interest at RPI+1% correct? I ask because there are some contracts which have clauses where they are able to change their rates. So I am not sure if all original H2B customers are ported onto the new rates, or stick to the original contract.

2) Just looking at RPI and CPI, and RPI is a lot higher! Well something like 14% RPI vs 10% CPI. So even though it's +1% vs +2%, the old scheme still works out more expensive.....have they made the new scheme cheaper? I would have thought the opposite considering the economy.

3) Even after all of the above, the rate of 1.75% is still very cheap in today's world. Even annual increase of 15% say that would be c. 0.26% points each year say. So year after 2% still very cheap, with mortgages being 5%+ nowadays and savings accounts yielding 3%+. Then it makes sense to save money rather than pay any of these loans off? (My mortgage is 2% ish)

4) The only time I would probably think of repaying my H2B is if there is a huge crash in property market, then I can cash in on the reduced equity loan I have to pay back.

Thanks!

silvercar

1) correct, your terms are unchanged
3) it is at the moment because interest rates are high. When it was set up interest rates were lower and the HTB interest was relatively high encouraging people to remortgage to cover their HTB loan in their main mortgage. Now the opposite is true. Keep saving while you are on a low interest rate, though if house prices rise it will cost you more to buy out the HTB so monitor it.
4) True, unless you also want to move home.

Rony

Thank you!