HTB and Remortgaging What To Do?

sirscrapydoo

Hello everyone,

I know there have been a number of posts regarding HTB and paying it off or leaving separate but I struggle with all the numbers so I'm hoping to put in my situation here for advice.

The mortgage I took out was £168,499 fixed for 5 years at 1.56%. That ends in June 2025

The HTB amount was £72,000

This means that in June, the interest free HTP loan is also coming to an end and the 1.75% rate kicks in.

My HTB loan was £72k but due to the estimated house price, it is probably around the £82k mark now (the house yet to be valued so I'm going by similar houses on the estate).

Now, my thinking is that the 1.75% is going to be lower than any mortgage rate I get right now (looking at 4.07%). Therefore, it would be better to keep the two debts separate.

My maths (which I am rubbish at) would have the HTP payments from year 6 as follows if I follow this guide (moneysavingexpert.com/mortgages/help-to-buy-equity-loans/):

Year	Interest Rate	Annual Interest Payment	Monthly Payment (with £1 fee)
2025	1.75%	£1,225	£103.08
2026	1.80%	£1,261.75	£105.15
2027	1.86%	£1,299.60	£107.47
2028	1.91%	£1,338.59	£111.22
2029	1.97%	£1,378.75	£115.56

Is my maths correct? 

My current mortgage payments are £586 per month (I have been overpaying to get the mortgage down).

If my mortgage payments go up to say £750 per month and I leave the HTP loan separate, I’d be paying a total of around £850-£900 per month for both.

If I decided to borrow more in June to pay off the HTB loan (the £82k), I’d be looking at monthly mortgage payment of around £1200.

I could afford that but it would mean cutting back on other monthly outgoings, which is fine, needs must.

If I kept the loans separate, I could still make overpayments on the mortgage to try and get that down more. However, would the house rising in value and therefore the HTP loan going up negate that?

I guess my question is, what would be the most sensible thing to do knowing the above information?

Fix at 2 years and keep the loans separate and hope interest rates drop for June 2027

Fix at 2 or 5 years, borrow more money and pay off the HTP

I will look to meet with mortgage advisors but I’d like to make sure I understand all the figures before I go meet with some next month.

eschaton

I know nothing about HTB but if you can keep the £72/82k at 1.75% then I would. For as long as you are allowed to. I don’t see mortgage rates ever going below 1.75%. It would be a surprise. 

Then any overpayments into the mortgage unless you can get a better savings rate. 

Basically always try and pay the debt with the highest interest rate first. 

amnblog

What is key is the property value and its direction.

If it has gone up 14% in 5 years (don't assume a neighbours for sale figure is the value). Where is it going next?

Increasing at a similar rate (14% over 5 years)? The cost of not buying out the HTB loan is an extra £191 on top of the loan payment.

Value not increasing, or falling, no benefit in buying out the HTB loan at this time.