Help to buy - repay now or later?

zoecarter_7

My partner and I are unsure what to do with regards to our remortgage and whether to remortgage the help to buy into it to get rid or leave it for another year or two until rates slightly come down. 

Some facts about our house:

- Bought 2018 at mortgage rate of 2.37%
- Has increased in price to 350k (from £320k 2018)
- Help to buy equity amount is 10%.
- LTV 69%

We are due to end the help to buy from end of august and our mortgage ends end of September. We can fix a 30 year mortgage either at 4.16% for 2 years or 3.99% for 5 years. Adding in the help to buy pushes up the monthly payments so we'll be paying roughly another £350 a month in total more or £230 more without adding it in, we're leaning towards remortgaging it in just so it's sorted and we actually be paying it back. However, year 6 interest rate with htb repayments are 1.75% so considerably lower to the mortgage rates but it isn't paying anything actually off just the interest. 

So would you hold off for a couple years then add it as a second mortgage/extra part to mortgage or add it in now? Any advice is much appreciated.

MattMattMattUK

zoecarter_7 said:

My partner and I are unsure what to do with regards to our remortgage and whether to remortgage the help to buy into it to get rid or leave it for another year or two until rates slightly come down. 

Some facts about our house:

- Bought 2018 at mortgage rate of 2.37%
- Has increased in price to 350k (from £320k 2018)
- Help to buy equity amount is 10%.
- LTV 69%

We are due to end the help to buy from end of august and our mortgage ends end of September. We can fix a 30 year mortgage either at 4.16% for 2 years or 3.99% for 5 years. Adding in the help to buy pushes up the monthly payments so we'll be paying roughly another £350 a month in total more or £230 more without adding it in, we're leaning towards remortgaging it in just so it's sorted and we actually be paying it back. However, year 6 interest rate with htb repayments are 1.75% so considerably lower to the mortgage rates but it isn't paying anything actually off just the interest. 

So would you hold off for a couple years then add it as a second mortgage/extra part to mortgage or add it in now? Any advice is much appreciated.

Personally I would leave the HTB as the interest rate is significantly lower, but there is the house price issue to consider as it is an equity percentage. I do not think that house prices will go up much in the next two years so I would be fixing for two, overpaying as much as possible and then looking to remortgage in two years to absorb the HTB part, by which time interest rates should have fallen considerably, hopefully to around the 2% area. 

As with all these things however, they are a gamble and only you can make the choice which way to risk it. 

chanz4

I redeemed myn last year, my advice pay the htb interest be a lot cheaper

renegade1

"so I would be fixing for two, overpaying as much as possible and then looking to remortgage in two years to absorb the HTB part, by which time interest rates should have fallen considerably, hopefully to around the 2% area."

This is my plan exactly. My htb interest is due later this year. I plan to get a two year fixed term while keeping the htb and overpaying so that (hopefully) by the time I remortgage in two years and add the htb loan I will be on 60% LTV. I hope it all works out. House prices are forcasted to take a dive this year which is another reason it doesn't make sense to pay it off now.

zoecarter_7

renegade1 said:

"so I would be fixing for two, overpaying as much as possible and then looking to remortgage in two years to absorb the HTB part, by which time interest rates should have fallen considerably, hopefully to around the 2% area."

This is my plan exactly. My htb interest is due later this year. I plan to get a two year fixed term while keeping the htb and overpaying so that (hopefully) by the time I remortgage in two years and add the htb loan I will be on 60% LTV. I hope it all works out. House prices are forcasted to take a dive this year which is another reason it doesn't make sense to pay it off now.

Surely though if house prices do take a dive it's better to pay it off then at the amount owing would be less? 

chanz4

renegade1 said:

"so I would be fixing for two, overpaying as much as possible and then looking to remortgage in two years to absorb the HTB part, by which time interest rates should have fallen considerably, hopefully to around the 2% area."

This is my plan exactly. My htb interest is due later this year. I plan to get a two year fixed term while keeping the htb and overpaying so that (hopefully) by the time I remortgage in two years and add the htb loan I will be on 60% LTV. I hope it all works out. House prices are forcasted to take a dive this year which is another reason it doesn't make sense to pay it off now.

cant see interest going so low