Repaying Help to buy equity loan early
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badaz52
Posts: 255 Forumite
Hi everyone,
We bought a new build in 2017 and borrowed 20% from the government on their help to buy equity loan scheme. We have since learned that house prices in our area have gone up and will likely continue to rise. I am looking into the prospect of adding the loan amount to my mortgage now instead of at the end of the interest free period to minimise how much I have to give back to the government. As there is still a decent amount of equity and deposit that I put into the property when I bought it I don't foresee any issues with doing this and intend to settle the 20% completely on the mortgage.
What I'm interested to know is when requesting a help to buy valuation you have to appoint a RICS surveyor to do the valuation rather than an estate agent, now call me hopeful but as surveyors look at it from a bricks and mortar perspective rather than if they were marketing it and adding money on for certain selling features such as extensions, fancy kitchens etc. could this mean that the valuation would come back lower than what an estate agent would value it at for example? I know they wouldn't value it lower than the purchase price as that wouldn't be in their best interests but it might not be as high as an estate agent. Call me hopeful but I'm just curious to know if anyone on here has gone through this and what the result was?
Estate agents believe currently that our home has increased by 20% in just 2 years which seems excessive to me. Not that I'm complaining but I think you see my point I'd rather that benefit me rather than the government lol.
I know I have to give the government 20% so if the value has gone up then I owe them more (and can cover this) but I'm just curious.
I should point out we haven't done anything to the house, it is as we bought it standard spec.
We bought a new build in 2017 and borrowed 20% from the government on their help to buy equity loan scheme. We have since learned that house prices in our area have gone up and will likely continue to rise. I am looking into the prospect of adding the loan amount to my mortgage now instead of at the end of the interest free period to minimise how much I have to give back to the government. As there is still a decent amount of equity and deposit that I put into the property when I bought it I don't foresee any issues with doing this and intend to settle the 20% completely on the mortgage.
What I'm interested to know is when requesting a help to buy valuation you have to appoint a RICS surveyor to do the valuation rather than an estate agent, now call me hopeful but as surveyors look at it from a bricks and mortar perspective rather than if they were marketing it and adding money on for certain selling features such as extensions, fancy kitchens etc. could this mean that the valuation would come back lower than what an estate agent would value it at for example? I know they wouldn't value it lower than the purchase price as that wouldn't be in their best interests but it might not be as high as an estate agent. Call me hopeful but I'm just curious to know if anyone on here has gone through this and what the result was?
Estate agents believe currently that our home has increased by 20% in just 2 years which seems excessive to me. Not that I'm complaining but I think you see my point I'd rather that benefit me rather than the government lol.
I know I have to give the government 20% so if the value has gone up then I owe them more (and can cover this) but I'm just curious.
I should point out we haven't done anything to the house, it is as we bought it standard spec.
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Comments
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Any ERC on the mortgage
LTV will go up will probably increase mortgage rate.0 -
getmore4less wrote: »Any ERC on the mortgage
LTV will go up will probably increase mortgage rate.
The mortgage is on a fixed term due to end October this year which is why I'm looking to do this.
I'm going to guess that the RICS valuation will be higher than what we paid but lower than the local estate agents valuation.
When we bought the house we put in 53% deposit, 20% from the help to buy equity loan scheme and the remainder is mortgage.
My mortgage lender won't charge me ERC if I'm asking for more they just add it on as a sub account (Halifax) as they did this when I moved.0 -
I hope you have realized by now that using HTB EL with 53% deposit was a mistake...When we bought the house we put in 53% deposit, 20% from the help to buy equity loan scheme and the remainder is mortgage.
Just pay the £300ish for the valuation which is good for 3 months, 2 months before the mortgage fixed term expires and make a decision.
Ignore EA valuations, if you want more realistic figure for free - search RM/Zoopla for sold/SSTC similar properties nearby.0 -
I hope you have realized by now that using HTB EL with 53% deposit was a mistake...
Just pay the £300ish for the valuation which is good for 3 months, 2 months before the mortgage fixed term expires and make a decision.
Ignore EA valuations, if you want more realistic figure for free - search RM/Zoopla for sold/SSTC similar properties nearby.
Why was 53% deposit a mistake?0 -
The mistake wasn't to have 53% deposit. It was to use a scheme like HTB EL designed to allow buyers with low deposits 5-10% access to better LTV and properties they couldn't have afforded otherwise.Why was 53% deposit a mistake?
With 53% deposit you already had access to top rates as far as LTV is concerned and unless you weren't able to afford the mortgage on the 47% the only "benefit" of the HTB EL was interest free for 5 years. Which isn't exactly benefit when you consider the fees around securing it and redemption and all the admin overhead/hassle around it. Even if the property value remains the same.
As you are now realizing the property value rise has completely wiped the "interest free" benefit of the HTB0 -
I am not entirely sure was the point of the original post is.
You know you need a RICS valuation to get a figure to repay the H2B loan.
Estate agent talk on pricing is, as ever, waffle.I am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
I've just a had a RICS valuation done on my property for this purpose and it came back 20k less than what I paid for it 3.5 years ago. Identical properties are up for sale at 10-15k more so I'm just hoping Target don't contest the valuation.0
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The HTB rate may have been higher than was possible without it.
It works when you are looking at 75% 95% you get a much better rate on the bulk of the debt.
Not on 33% 53%0 -
You need to look at where your property value will be in 3 years time. If it won’t increase then it may be worth waiting. Having already bought and already sitting on an increase in value and therefore equity payback on the HTB portion, paying it off now crystallises that gain. Look at what may happen in the next 3 years.if property values fall you will kick yourself for paying back a higher amount than you need.I'm a Forum Ambassador on The Coronavirus Boards as well as the housing, mortgages and student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0
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Hi, does anyone know if I pay off my mortgage in full would I also need to pay off the equity loan?
I can't seem to find an answer anywhere.
Thank you.0
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