Should I repay my HTB loan or do something else with money?

In 2015 I took out a HTB mortgage on a £145,000 new build apartment.  The HTB loan was £29000.

After my initial  fix I didn't remortage to repay it as I thought I could save up enough to repay it myself, however, I ended up leaving my job in December 2019 and starting working self employed at the end of 2020 which used up nearly all of my savings.

I currently owe £77k at 3.61% and am due to remortgage in 2027.

My earnings have recently increased considerably due to some side projects taking off.  So far this year I've earnt £38k from my side projects and have also taken £11k as a dividend from my LTD company.  My side project did £11k profit just in November and if it continues like this I hope £7-8k a month is feasible.

With a mortage of £540, htb interest at £53 my living expenses are very low.  No CC debt or car payments etc.  I plan for bills and groceries to come to £1400 a month, I put £600 in various regular savers, 30% for tax.  I've been saving the rest fairly aggressively.  My only big purchase recently was a high end TV as mine broke.

Excluding the amount set aside for tax then I have £17k in savings, so I'm not far away from being able to repay 50% of the HTB loan depending on valuation.

I haven't had my apartment valued yet - however 1 bed new builds are going for £180k - £190k.  The 2 bed on the top floor of my 3 apartment building was listed for £215k and it had zero interest, so the guy just rented it out.

I would hope that the HTB valuation comes in at around 160-170k.  I also have a burnt out former crack den directly opposite, live next to a mechanics and the freeholder has hired a management agent once in 8 years lol, doesn't respond to emails.  All factors I hope might lower the valuation.

Just wondering if repaying it asap is the best use of the money.  £13k is currently in a cash isa at 4.75% interest

My thoughts are that I should repay now whilst the housing market is struggling, in case it rebounds again in the next year.


  • amnblog
    amnblog Posts: 12,387
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    You are correct that the real issue is not the interest cost on the H2B loan (currently 2.20%), it is the value of the property at the time of the buy out. 

    Seems a bit reckless to use up your available capital to buy out the H2B loan when you are building a business.

    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • amnblog said:

    Seems a bit reckless to use up your available capital to buy out the H2B loan when you are building a business.

    I am not really active or motivated to dedicate any effort to my LTD company, burnt out and self motivation is an issue.  Plus, my side projects are essentially semi passive income requiring 1-2 days a month work but now generating £4-10k a month net profit. 

  • The potential issue is the HTB loan is going to keep rising each year and of course, so is the value of your property. I'd personally consider repaying it now, as the rate increases it will just add more pressure. If you was only 4/5 years into HTB then I would leave it. 
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