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  • FIRST POST
    • jam1991
    • By jam1991 15th Sep 18, 10:03 PM
    • 84Posts
    • 20Thanks
    jam1991
    FTB - Help2Buy Loan Strategy
    • #1
    • 15th Sep 18, 10:03 PM
    FTB - Help2Buy Loan Strategy 15th Sep 18 at 10:03 PM
    I am a FTB and have reserved a plot on a new build development.

    I am sole the applicant for the mortgage with the 20% government equity loan.
    House price: £226,995
    5% deposit is: £11,349 - I am increasing this minimum deposit to £33,000.
    Total deposit is: £78,399.

    Mortgage loan required is: £148,596.
    LTV - 65.46%

    Initial quotations are approx payments of £480pcm over 35 year mortgage term.
    With Brexit looming my intention was to go with a 5 year fixed rate product, so that I know my exact payments during the Government 0% 5 year period, from my own research the above monthly payment is more likely to increase towards £550pcm.

    My initial strategy was to either:
    1. Overpay the mortgage payment by £200pcm - (£12,000) over the 5 year term.
    2. Save the same £200pcm into a Cash ISA over the same term.

    I assume that option 1 makes the money work best? In terms of paying off the mortgage loan with interest and then remortgaging at the end of year 5 to take on the 20% government loan debt.

    I would really appreciate any comments and advice from people who have considered/or gone through with a Help2Buy equity loan mortgage. I'm happy to provide any further details, in order to receive more specific guidance.

    Thank you in advance.
Page 1
    • Thrugelmir
    • By Thrugelmir 15th Sep 18, 11:55 PM
    • 60,982 Posts
    • 54,187 Thanks
    Thrugelmir
    • #2
    • 15th Sep 18, 11:55 PM
    • #2
    • 15th Sep 18, 11:55 PM
    Why a 35 year term for the mortgage?
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • jam1991
    • By jam1991 16th Sep 18, 12:32 AM
    • 84 Posts
    • 20 Thanks
    jam1991
    • #3
    • 16th Sep 18, 12:32 AM
    • #3
    • 16th Sep 18, 12:32 AM
    Why a 35 year term for the mortgage?
    Originally posted by Thrugelmir
    Thank you for your reply, I'm currently 27 years old.

    The mortgage advice broker I've dealt with so far have been quoting 35 year term following the intial affordability checks. With my retirement age of 67. Should I be looking to go with a 30 year term instead?
    • goodwithsaving
    • By goodwithsaving 16th Sep 18, 12:37 AM
    • 880 Posts
    • 1,391 Thanks
    goodwithsaving
    • #4
    • 16th Sep 18, 12:37 AM
    • #4
    • 16th Sep 18, 12:37 AM
    Thank you for your reply, I'm currently 27 years old.

    The mortgage advice broker I've dealt with so far have been quoting 35 year term following the intial affordability checks. With my retirement age of 67. Should I be looking to go with a 30 year term instead?
    Originally posted by jam1991

    I would go for a longer term mortgage but overpay as if it were a shorter term.
    Every time you borrow money, you’re robbing your future self. –Nathan W. Morris
    • dimbo61
    • By dimbo61 16th Sep 18, 1:25 PM
    • 10,071 Posts
    • 5,451 Thanks
    dimbo61
    • #5
    • 16th Sep 18, 1:25 PM
    • #5
    • 16th Sep 18, 1:25 PM
    Well done on saving a good deposit.
    Not so sure about New Build as you have a good deposit and most new builds tend to cost 20/25% more expensive than an older property in the same area of the same size !
    However you are already thinking about what happens at the end of the 5 years when you start paying interest on the HTB loan.
    Buying a new home is always expensive with legal costs, surveys, mortgage fees even if you have No stamp duty to pay.
    Once you get the keys to your new home you then have lots of other costs.
    Broadband and phone line, carpets, curtains, new furniture and alterations you may want to do.
    Building up cash saving ( emergency pot ) while also overpaying every month sounds like a brilliant plan to me.
    Would you consider an offset mortgage ?
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