The Help to Buy calendar lottery - how buying a home on the 'wrong' day can cost you £1,000s - MSE

On a £240k with 4% of 1.75% over a year that's £168 extra in the first year.

On 25 year so 21 left repayment even compounding the 4% I would be very surprised it gets anywhere near £4,750 you have in the article

Show your workings

I will do mine later.

(might get there if you use interest only over 21years)

lets look at what has been said

How the 'calendar lottery' creates Help to Buy winners and losers

We've crunched the numbers on varying loan sizes up to the maximum £240,000, assuming the loan is paid back over 25 years – five of which would be interest-free – and assuming the rate rises by 4% each year.

you could be thinking from that that the loan is repaid over the 25 years and the calculations are based on that.

They get for the £240k case
loan........high........low.........difference
£240,000 £129,403 £124,643 £4,760

But that is based on interest only

doing it with the rate change at the beginning and end of each year rather than month by month changing in April you get a higher number but same ball park and keeps it simpler.

interests only
loan........high........low.........difference
£240,000 £130,071 £125,068 £5,003

by the last year your rate is 3.7-4% and your payment around £9k for the year.

Still owing the HTB equity which could be more or less than the £240k you started with


OK with HTB you can't doi repayment but for illustration....
If you take the 5 years interest free interest only and then go repayment for 20years on HTB rate terms
loan........high.......low......difference
£240,000 £61,767 £59,210 £2,557

Mortgage paid off not, so scary on a £240k debt
the repayment range is £1190pm-£1300pm even with the rate creeping up.

The real HTB lottery is the house value and what you owe when you try to pay it off.

YBY details If someone wants to check)
Interest only

.....rate change ....interest only interest
.Y.....start...end....start...........end
.0 1.82% 1.75% £4,368.00 £4,200.00
.1 1.89% 1.82% £4,542.72 £4,368.00
.2 1.97% 1.89% £4,724.43 £4,542.72
.3 2.05% 1.97% £4,913.41 £4,724.43
.4 2.13% 2.05% £5,109.94 £4,913.41
.5 2.21% 2.13% £5,314.34 £5,109.94
.6 2.30% 2.21% £5,526.91 £5,314.34
.7 2.39% 2.30% £5,747.99 £5,526.91
.8 2.49% 2.39% £5,977.91 £5,747.99
.9 2.59% 2.49% £6,217.03 £5,977.91
10 2.69% 2.59% £6,465.71 £6,217.03
11 2.80% 2.69% £6,724.34 £6,465.71
12 2.91% 2.80% £6,993.31 £6,724.34
13 3.03% 2.91% £7,273.04 £6,993.31
14 3.15% 3.03% £7,563.96 £7,273.04
15 3.28% 3.15% £7,866.52 £7,563.96
16 3.41% 3.28% £8,181.18 £7,866.52
17 3.55% 3.41% £8,508.43 £8,181.18
18 3.69% 3.55% £8,848.77 £8,508.43
19 3.83% 3.69% £9,202.72 £8,848.77

Total................£130,070.65.£125,067.93 difference £5,002.72


repayment start/end pairs as above for amount borrowed payment interest YbY rates used as above
(can't be bothered to format)

£240,000.00 £240,000.00 £1,193.77 £1,185.91 £4,284.52 £4,119.15
£229,959.32 £229,888.24 £1,201.59 £1,193.40 £4,264.88 £4,098.98
£219,805.13 £219,666.45 £1,209.35 £1,200.83 £4,234.49 £4,068.44
£209,527.38 £209,324.92 £1,217.04 £1,208.19 £4,192.21 £4,026.44
£199,115.11 £198,853.13 £1,224.62 £1,215.44 £4,136.80 £3,971.80
£188,556.45 £188,239.67 £1,232.07 £1,222.56 £4,066.88 £3,903.22
£177,838.44 £177,472.11 £1,239.36 £1,229.54 £3,980.93 £3,819.24
£166,947.00 £166,536.93 £1,246.46 £1,236.32 £3,877.27 £3,718.29
£155,866.72 £155,419.38 £1,253.33 £1,242.88 £3,754.06 £3,598.61
£144,580.80 £144,103.37 £1,259.94 £1,249.19 £3,609.24 £3,458.26
£133,070.80 £132,571.31 £1,266.23 £1,255.21 £3,440.55 £3,295.10
£121,316.55 £120,803.92 £1,272.18 £1,260.88 £3,245.47 £3,106.77
£109,295.88 £108,780.09 £1,277.72 £1,266.17 £3,021.19 £2,890.61
£96,984.39 £96,476.61 £1,282.81 £1,271.03 £2,764.59 £2,643.70
£84,355.21 £83,867.91 £1,287.40 £1,275.40 £2,472.20 £2,362.79
£71,378.65 £70,925.85 £1,291.41 £1,279.23 £2,140.12 £2,044.21
£58,021.86 £57,619.30 £1,294.79 £1,282.45 £1,763.99 £1,683.92
£44,248.43 £43,913.83 £1,297.46 £1,284.99 £1,338.94 £1,277.34
£30,017.89 £29,771.24 £1,299.35 £1,286.80 £859.45 £819.37
£15,285.18 £15,149.06 £1,300.38 £1,287.78 £319.33 £304.25

Total interest £61,767.12 £59,210.49 £2,556.62

Kentish_Dave wrote: »

This is completely ignoring the time value of money. I know that a site like this will not be able to employ people with good numerate degrees, but seriously, this is just awful.

If you do not understand numbers then please, don’t try to write about them.

Callum, are you willing to apologise and have another try with the right numbers?

If you think this is bad you should see the shocker from last year
recommending the wrong mortgage from the examples.

https://www.moneysavingexpert.com/news/2018/07/four-in-10-mortgages-now-fee-free---but-dont-get-sucked-in/

covered in two threads.
https://forums.moneysavingexpert.com/discussion/5873406/four-in-10-mortgages-now-fee-free-but-dont-get-sucked-in-mse-news
https://forums.moneysavingexpert.com/discussion/5874729/is-this-shockingly-bad-advice-from-mse-or-am-i-just-misunderstanding