Not sure what we should be doing re: Help to buy

Canuck_in_Wales

Hi, thought I would give you a little bit of background first, if that is ok?

My husband and I just recently bought our first home, a 2 bedroom new build using Cardiff Council's help to buy programme, called 1st Homes Cardiff. We're "senior" first time buyers (51 & 47) & together have a combined income of £45,000.00. We couldn't get a mortgage for the full value of a house in Cardiff but were lucky enough to get our current house on the Cardiff Programme. It is a shared equity property, we are the full owners, but the council have a 30% share of the equity in the house. We can buy out the council at any time after 3 years of living in the house, but the fly in the ointment is it is an all or nothing, we cannot stairstep it. At the time of completion (1st July) that 30% was £70,000.00, but if the value of the house goes up, obviously so does that £70k. Our mortgage was for £151,000.00 & our fixed interest rate is 1.06%. (just in case that is pertinent information)

So, we are trying to plan ahead, as we would like to try to buy out the council in 5 years, when our fix is up for our mortgage. BUT, I don't know whether we would be better off overpaying as much as we can on our mortgage in the next 4.5 years or, would we be better setting aside the money to use toward the buy out of the council? Currently we are saving between £800.00 - £1,000.00 a month, which is just going into a savings account toward our retirement. That won't be enough to buy out the council, but we have other savings we could dip into or perhaps we would get a small loan to make up the difference. I am leaning toward the overpayment route, hoping to knock a good few years off our mortgage, but a friend suggested we might be better holding onto the money and buying out the equity in the house. Our age is a big factor in both sides of this decision, our mortgage takes us up to 69 & 65, and as the bank would only give us a 19 year mortgage because of my age, I am wary that we wouldn't be able to re-mortage to get the money to buy out the council if we're unable to save it ourselves.

Anyway, I don't really understand enough to make an informed decision on what we should do, but when I spoke with a friend about this, their suggestion was to "ask Martin", meaning you guys, so that is what I am here doing. Hope some of you can help. I don't expect anyone to make the decision for us, but informed opinions are good & I know that many of you on here no WAY more than my husband and I do about this kind of thing.

Thank you in advance.

MikeJXE

Someone will be along to give you the best advise 

I'm no expert but would guess the extra you are thinking of paying off would be better in a high interest savings account while there are plenty about