Do i need a Mortgage Broker? (HTB)

brothermalzone

Our 5 Year term ends soon and we're looking to remortgage our property and take on the HTB loan.

Is it worth us paying £500-£600 for a mortgage broker to assist with all of the steps or is it easy enough to sort out on your own? 

chanz4

with current rates I wouldnt, htb is so low interest and house prices not really moving

brothermalzone

chanz4 said:

with current rates I wouldnt, htb is so low interest and house prices not really moving

Do you mean you wouldn't remortgage at the moment? That means we'd take the hit on the interest rate. 

kingstreet

chanz is talking about retaining the HTB equity loan while mortgage rates are higher. You can still avoid the current lender's 'follow-on' rate by taking a retention product from your existing lender or remortgage to a new lender to replace the current mortgage and leave the HTB loan in place.

Only a small number of lenders will accept the HTB loan being retained when you remortgage so broker assistance may be advisable if the retention option isn't attractive. BTW many brokers wouldn't charge if they handle the retention option for you.

brothermalzone

kingstreet said:

chanz is talking about retaining the HTB equity loan while mortgage rates are higher. You can still avoid the current lender's 'follow-on' rate by taking a retention product from your existing lender or remortgage to a new lender to replace the current mortgage and leave the HTB loan in place.

Only a small number of lenders will accept the HTB loan being retained when you remortgage so broker assistance may be advisable if the retention option isn't attractive. BTW many brokers wouldn't charge if they handle the retention option for you.

OK thanks for the response. So potentially keep the loan for another year and wait for interest rate to drop further before remortgaging with the HTB loan

kingstreet

In year six of an HTB loan, the interest rate is 1.75%. With inflation at 5%pa, it will be 1.87% in year seven, 2.0% in year eight and so on. You need to monitor mortgage rates against these to establish the "sweet-spot" for remortgaging to consolidate the HTB loan. You also need to monitor property values in your area as the loan repayable is a percentage of the value, not what you originally borrowed and you don't want to win on the swings while losing more on the roundabouts...

brothermalzone

kingstreet said:

In year six of an HTB loan, the interest rate is 1.75%. With inflation at 5%pa, it will be 1.87% in year seven, 2.0% in year eight and so on. You need to monitor mortgage rates against these to establish the "sweet-spot" for remortgaging to consolidate the HTB loan. You also need to monitor property values in your area as the loan repayable is a percentage of the value, not what you originally borrowed and you don't want to win on the swings while losing more on the roundabouts...

If I decide to do a retention mortgage, how do HTB know how much the property is worth for the interest charge? Assuming we won't need to get any valuations done? 

chanz4

brothermalzone said:

kingstreet said:

In year six of an HTB loan, the interest rate is 1.75%. With inflation at 5%pa, it will be 1.87% in year seven, 2.0% in year eight and so on. You need to monitor mortgage rates against these to establish the "sweet-spot" for remortgaging to consolidate the HTB loan. You also need to monitor property values in your area as the loan repayable is a percentage of the value, not what you originally borrowed and you don't want to win on the swings while losing more on the roundabouts...

If I decide to do a retention mortgage, how do HTB know how much the property is worth for the interest charge? Assuming we won't need to get any valuations done? 

they use your loan amount from them to work the interest

brothermalzone

chanz4 said:

brothermalzone said:

kingstreet said:

In year six of an HTB loan, the interest rate is 1.75%. With inflation at 5%pa, it will be 1.87% in year seven, 2.0% in year eight and so on. You need to monitor mortgage rates against these to establish the "sweet-spot" for remortgaging to consolidate the HTB loan. You also need to monitor property values in your area as the loan repayable is a percentage of the value, not what you originally borrowed and you don't want to win on the swings while losing more on the roundabouts...

If I decide to do a retention mortgage, how do HTB know how much the property is worth for the interest charge? Assuming we won't need to get any valuations done? 

they use your loan amount from them to work the interest

Thank you for your help. 

I think for I will stay with my current lender with the way interest rates are and pay the interest on the HTB loan for a while. 

Once I get that sorted are there any other processes I need to do with HTB or is it automatic? 

kingstreet

I think you may have misunderstood. The property value is needed by the HTB Agent only to calculate the redemption figure for the loan. For the interest payments it simply uses the initial percentage of the purchase price. The HTB Agent has no part in a customer retention product/rate switch.