Help to Buy Interest Post 5 years

dan8030 · 9 May at 3:15PM

Hello,

I originally took out a H2B loan in Nov 2020 to purchase my 1st house, I am shortly coming to the end of the 5 year interest free part which is fine.

Due to increase in value of my house I cannot afford to re-mortgage in November due to other debts, so will be switching my deal with my current lender (Nationwide) for an additional 3 years.

I am aware that I will pay interest for those 3 years on the original loan amount (£40,800) and I am aware that this increases each year.

What I can't seem to confirm is whether the interest is compounded each year for example:

£40800 x 1.75% = £714 + £12 (admin fee) = £726 p.a. / £60(ish) p.m. (this is 2026)
£40800 x 1.86% = £758 + £12 (admin fee) = £770 p.a. / £64(ish) p.m. (this is 2027)
£40800 x 1.86% = £804 + £12 (admin fee) = £816 p.a. / £68(ish) p.m. (this is 2028)

What I need to clarify is whether the interest in the 2nd year (2027) will be £64 pm or will it be £124 pm (1st and 2nd year added together)?

Thanks in advance.

silvercar · 9 May at 3:19PM

Your figures are correct. You don’t add year 1 and year 2 together. At the moment that is far cheaper than you could get on a mortgage deal, so it makes sense to keep HTB going.