Paying off mortgage before HTB loan

MaxM1990

Hi,

We bought a property in 2019 through an HTB loan + mortgage. Over the years, we used all our savings to make regular mortgage overpayments; the plan being to remortgage the house after 5 years to pay off the HTB loan. But with interest rates at the highest ever, we are wondering if we should fully repay the mortgage next year while keeping the HTB loan and paying interest over the next one or two years. Please could someone advise if this is an option. The rules state "You must repay the equity loan in full when you pay off your repayment mortgage, sell your home or reach the end of your loan term, normally 25 years."

Many thanks.

simon_or

As per the rules you've shared it looks like you can't pay it off in full.

Perhaps when your fix ends just let it fall on variable and leave a small amount unpaid so the mortgage keeps chugging along with a tiny monthly direct debit? Don't know if that's possible.

kingstreet

You cannot allow the HTB loan to be promoted to a first charge by redeeming your current first charge mortgage.

Simply reduce the first charge to a few hundred and forget about it.

MaxM1990

Thanks a ton Kingstreet and Simon_or

dimbo61

You need to keep a close eye on the Interest rates your paying on both the mortgage and the HTB loan.
Now your on a Repayment  plan with your mortgage but only paying the Interest each month on the HTB loan.
You want to own the whole property at some point so when is the best time to pay off the HTB loan by borrowing more from a lender to own 100% of your home is the big question.

marmitesocks

Just to be aware, there is a major issue for anyone trying to make changes/exit HTB at the moment:

https://forums.moneysavingexpert.com/discussion/6455729/help-to-buy-not-answering-phone/p1

renegade1

i'm intrigued to know how someone who needed help from the government to buy a property is able to pay off their main mortgage in 5 years!

dimbo61

When HTB came out it was sold as a Interest free loan for 5 years.
Maybe they are savers and not spenders
Maybe they moved up the career ladder and now earn more
Maybe Gran died and left them £500,000