Help2Buy 20% - Pay them off with re-mortgage

StuieUK34

Hey all,
Any of u been through the process of paying off H2B ?  if so, dont suppose you recall any/if you had to pay extra fee's when doing so ?

1st time buyer 4yrs 8mths ago, used Help the Government 20% scheme.
Fixed term is coming to an end in a few months, so will need to remortgage to pay off H2B, and also secure a good rate as such for 2 or 3 years...

i've found out i need to get a RICS survey done to send to H2B.
But as for lenders (using a Broker)...
Some of the re-mortgage deals show it includes "free standard legal fees & valuations".....

I think cos of the H2B, that goes 1 step outside of standard, but i cant seem to find what the potential extra cost would be when remortgaging to pay off the H2B  (pay off exisiting mortgage + H2B 20% value = 69% Loan to Value)

Am just trying to collect as much info so i dont get duped, or hit with hidden fee's i dont know about, etc

silvercar

You don’t have to remortgage to incorporate the HTB, you may find it costs less to keep the HTB going and choose a new mortgage deal.  The interest charged on the HTB is relatively low.

StuieUK34

cheers for the reply..
Not sure i get the logic ?
In April, we be out of our 5yr fixed mortgage..
H2B will charge £972 in the first year.
If we re-mortgage with the 2nd charge in place (not paying off H2B), granted the monthly payments would be lower, but i would have this noose round the house still....
I guess if you mean:  if we were planning on selling up in a few years, makes sense to pay the H2B interest, then pay them off if/when we sell up ?

silvercar

At the moment you have a mortgage plus a HTB loan that charges a lower interest rate. That interest rate will probably be lower than your mortgage rate for a few years. So unless you feel that your property price will increase rapidly over the next few years it would cost you less to keep the HTB loan going. If you feel your property value will increase then it makes more sense to clear the HtB loan, by increasing your mortgage to cover it or from savings.

kingstreet

If you feel the likely growth in the value of your property will outweigh replacing the 1.75% HTB cost with a mortgage rate of 4.5%+ go for it.

We're finding when we put these options to clients, they are taking a rate switch with their current lender and leaving the HTB loan as it is, at least for the time being.

StuieUK34

makes sense

cheers for the input...
I get what your saying in terms of off-setting,  makes good sense

cheers