How do I know the best time to repay H2B equity loan for new build?

rui1101

Hello! I hope you don't mind me posting this question, as I am hopeless in this topic.

I bought my property with 20% equity loan and I am thinking to repay10% now, but I am not sure if this is the right timing..

I bought :

• new build in East London (E17),
• Exchange was done in May 2022, 
• Completion was done in November 2022, 
• I borrowed 20% for H2B equity loan.

From what I understand, I can repay 10% of what I owe government and I need to pay all of below: 
1. Surveyor fee 
2. Admin cost to Target (200)
3. My solicitor quoted 650+VAT 

My questions are:

• if I get the survey report now, is it most likely that the price will be the same from my buying price from 2022?  I heard new build selling price is the forecast for the next couple of years... or 
• Maybe if I wait for a little while, the price could drop hence I could pay less money for 10%? 
• Is there any website etc. which can give me estimate? I tried Zoopla but it does not give me anything( maybe its too new ?) 

I want to repay as soon as possible because maybe in 5 years time, the price could go up and end up paying more, but I do not know the right timing and if it's worth spending 1-3 cost right now to repay just 10%. 

Any insight will be appreciated! 

 

kingstreet

rui1101 said:

Hello! I hope you don't mind me posting this question, as I am hopeless in this topic.

I bought my property with 20% equity loan and I am thinking to repay10% now, but I am not sure if this is the right timing..

I bought :

• new build in East London (E17),
• Exchange was done in May 2022, 
• Completion was done in November 2022, 
• I borrowed 20% for H2B equity loan.

From what I understand, I can repay 10% of what I owe government and I need to pay all of below: 
1. Surveyor fee 
2. Admin cost to Target (200)
3. My solicitor quoted 650+VAT 

My questions are:

• if I get the survey report now, is it most likely that the price will be the same from my buying price from 2022?  I heard new build selling price is the forecast for the next couple of years... or 
• Maybe if I wait for a little while, the price could drop hence I could pay less money for 10%? 
• Is there any website etc. which can give me estimate? I tried Zoopla but it does not give me anything( maybe its too new ?) 

I want to repay as soon as possible because maybe in 5 years time, the price could go up and end up paying more, but I do not know the right timing and if it's worth spending 1-3 cost right now to repay just 10%. 

Any insight will be appreciated! 

 

No. You can repay 10% of the property value ie half the equity loan or 20% of the property value ie all the loan.

Unless your property is increasing in value. it may make more sense and cost less in fees to make overpayments on the mortgage to reduce the capital balance to make remortgaging the whole equity loan easier in future.

rui1101

@kingstreet Thanks so much! 
This is why I really appreciate the opinion from an expert...

So if I had spare cash, I should do an overpayment for my mortgage, instead of repaying H2B equity loan as it will lower the overall interest, while H2B loan can be sitting there interest free for 5 years...

 I was just worried if the property price goes up in 5 years, I will have to pay more but it makes sense to look at mortgage overpayment option.  

kingstreet

Review again if your property value appears to be increasing and don't forget the starting rate for "fees" in year six is only 1.75% and that may still be considerably lower than prevailing mortgage rates even by then.

rui1101

@kingstreet What you said makes total sense... thanks so much. really appreciate it! 

One question - how may I check the property value if it's new build (I checked some website but nothing comes up) 

GixerKate

Now that you own it and have lived in it it wouldn't be classed as a new built when putting it up for sale.  You need to see what is currently selling in your area that is the same as your property.

kingstreet

GixerKate said:

Now that you own it and have lived in it it wouldn't be classed as a new built when putting it up for sale.  You need to see what is currently selling in your area that is the same as your property.

This. Note the recent sale prices of similar property in the vicinity. These are the comparables a surveyor uses.

https://www.rightmove.co.uk/house-prices.html

dimbo61

You have 5 years Interest free on the H2B loan so I would start with the mortgage.
Hopefully your on  great deal as you bought before the brown stuff hit the fan