Help to buy scheme

[pmessling]

Good evening good people

Looking for a bit of advice. In 2014 i purchased my first house using the help to buy scheme, whilst at the time it sounded like a good idea getting on the property ladder and have been happy in my house with garage which has been great for working on my car, but now i wouldn't recommend it to anyone due to the long term cost.

Any way, i paid £267,995 for my property a new build and at the moment the same house on my development is now at £300000, which with the 20% government loan works out to £600000 i borrowed just over £50000, i have found it a bit annoying that after year 6 i'll be paying £80 a month on interest should i not be able to pay the loan off i don't think i'll be able to do the full amount, but half is definitely do able.

Working on the assumption that the value of the house is now 300k then thats now 60k as its worked out on the cost of the house when it comes to paying the loan off.

Ideally i'd like to be able to get a new mortgage deal as mine is due to expire in march which i could include the help to buy loan into and pay more monthly then what i do know. so basically borrowing more then the value of the house when i purchased it.

Or wait till the 6th year when more of the house will have been paid off and hopefully have money to pay off half and maybe a loan to pay the other half. (hopefully bank of mum and dad for that one)

But its still the fact its the value of the house at the time of settling the loan so feel forever chasing your tail, so just looking for a few opinions and any advice if any one has any ideas.

[BigTom85]

Get that loan gone ASAP IMHO. Bundle it into the mortgage if you have to.

You have still massively 'won' compared to not having purchased a property through the scheme. Chin up

[AyBee]

pmessling said:

Good evening good people

Looking for a bit of advice. In 2014 i purchased my first house using the help to buy scheme, whilst at the time it sounded like a good idea getting on the property ladder and have been happy in my house with garage which has been great for working on my car, but now i wouldn't recommend it to anyone due to the long term cost.

Any way, i paid £267,995 for my property a new build and at the moment the same house on my development is now at £300000, which with the 20% government loan works out to £600000 i borrowed just over £50000, i have found it a bit annoying that after year 6 i'll be paying £80 a month on interest should i not be able to pay the loan off i don't think i'll be able to do the full amount, but half is definitely do able.

Working on the assumption that the value of the house is now 300k then thats now 60k as its worked out on the cost of the house when it comes to paying the loan off.

Ideally i'd like to be able to get a new mortgage deal as mine is due to expire in march which i could include the help to buy loan into and pay more monthly then what i do know. so basically borrowing more then the value of the house when i purchased it.

Or wait till the 6th year when more of the house will have been paid off and hopefully have money to pay off half and maybe a loan to pay the other half. (hopefully bank of mum and dad for that one)

But its still the fact its the value of the house at the time of settling the loan so feel forever chasing your tail, so just looking for a few opinions and any advice if any one has any ideas.

Correct me if I'm wrong, but you want the taxpayer to lend you a lot of money to buy a house for free, and you feel like you should get all the benefit from any rise in house prices? Or have I missed the mark?

[pmessling]

You've completely missed the mark so get off your high horse. And I am a tax payer infact a 40% tax payer.

I was merely asking for advice on mortgage that could include the help to buy which I have now found out that is possible at the end of the term to include half the help to buy scheme back into a remortgage.

Also whilst the tax payer may well be helping me at present its a loan that is paid back with interest so I'm sorry for asking for advice.

[AyBee]

I wasn't on my high horse at all - was genuinely wondering what your concern was since I'm considering help to buy. £80/month on a £50,000 loan is an absolute bargain in my opinion and I'd snap the hand off of anyone who offered me that! You can pay the help to buy loan off at any point according to what I've read, is that not the case? Your point appears (to me, and I might still be wrong) to be that you borrowed £50k and have to pay off £60k because the house has gone up in value - but if you hadn't borrowed £50k, you either wouldn't have been able to afford the property at all, and so you wouldn't have got the benefit of any equity increase, or you wouldn't have been able to afford a place which has appreciated as much, and so wouldn't have got the benefit of a more expensive property increasing in value (on a % vs £ basis).

Edited by AyBee on Thursday 28th January 12:19

[GrumpyTwig]

Surely you're better off using the interest free / none payment period on the loan to its maximum by not paying it off until you have to.

I bought my place on the h2b scheme back when I was earning half what I am now and have managed to fix my mortgage up until the same time as the interest payments would be due to start on the loan. Overpaid on the mortgage at the same time and intend to just re-mortgage for the remaining amount + the loan amount and pay it off that way.

Can't see why it'd be to your advantage to pay the loan off earlier tbh

[Sarnie]

GrumpyTwig said:

Surely you're better off using the interest free / none payment period on the loan to its maximum by not paying it off until you have to.

I bought my place on the h2b scheme back when I was earning half what I am now and have managed to fix my mortgage up until the same time as the interest payments would be due to start on the loan. Overpaid on the mortgage at the same time and intend to just re-mortgage for the remaining amount + the loan amount and pay it off that way.

Can't see why it'd be to your advantage to pay the loan off earlier tbh

The longer he waits, the more his property appreciates (if it continues to), the more required to pay back the equity loan................pay it off asap and more of that property appreciation will be his rather than the governments....

[GrumpyTwig]

Sarnie said:

GrumpyTwig said:

Surely you're better off using the interest free / none payment period on the loan to its maximum by not paying it off until you have to.

I bought my place on the h2b scheme back when I was earning half what I am now and have managed to fix my mortgage up until the same time as the interest payments would be due to start on the loan. Overpaid on the mortgage at the same time and intend to just re-mortgage for the remaining amount + the loan amount and pay it off that way.

Can't see why it'd be to your advantage to pay the loan off earlier tbh

The longer he waits, the more his property appreciates (if it continues to), the more required to pay back the equity loan................pay it off asap and more of that property appreciation will be his rather than the governments....

True, forgot about that caveat.

[Sarnie]

GrumpyTwig said:

Sarnie said:

GrumpyTwig said:

Surely you're better off using the interest free / none payment period on the loan to its maximum by not paying it off until you have to.

I bought my place on the h2b scheme back when I was earning half what I am now and have managed to fix my mortgage up until the same time as the interest payments would be due to start on the loan. Overpaid on the mortgage at the same time and intend to just re-mortgage for the remaining amount + the loan amount and pay it off that way.

Can't see why it'd be to your advantage to pay the loan off earlier tbh

The longer he waits, the more his property appreciates (if it continues to), the more required to pay back the equity loan................pay it off asap and more of that property appreciation will be his rather than the governments....

True, forgot about that caveat.

This has always been the governments angle.....package it up as an interest free loan and people will jump on it....when in fact the property appreciating effectively gives them the interest on the loan.

Added tot he fact that currently, the equity loan prevents you from remortgaging to a new lender at the end of your rate if you aren't/can't consolidate the equity loan.

I never liked this scheme at all.

[GrumpyTwig]

Sarnie said:

GrumpyTwig said:

Sarnie said:

GrumpyTwig said:

Surely you're better off using the interest free / none payment period on the loan to its maximum by not paying it off until you have to.

I bought my place on the h2b scheme back when I was earning half what I am now and have managed to fix my mortgage up until the same time as the interest payments would be due to start on the loan. Overpaid on the mortgage at the same time and intend to just re-mortgage for the remaining amount + the loan amount and pay it off that way.

Can't see why it'd be to your advantage to pay the loan off earlier tbh

The longer he waits, the more his property appreciates (if it continues to), the more required to pay back the equity loan................pay it off asap and more of that property appreciation will be his rather than the governments....

True, forgot about that caveat.

This has always been the governments angle.....package it up as an interest free loan and people will jump on it....when in fact the property appreciating effectively gives them the interest on the loan.

Added tot he fact that currently, the equity loan prevents you from remortgaging to a new lender at the end of your rate if you aren't/can't consolidate the equity loan.

I never liked this scheme at all.

It's worked ok for me so far, but I'm in an area where property price rises are minimal so they will get little if nothing out of it and it got me onto the property ladder a bit easier/earlier.

[Challo]

Sarnie said:

GrumpyTwig said:

Sarnie said:

GrumpyTwig said:

Surely you're better off using the interest free / none payment period on the loan to its maximum by not paying it off until you have to.

I bought my place on the h2b scheme back when I was earning half what I am now and have managed to fix my mortgage up until the same time as the interest payments would be due to start on the loan. Overpaid on the mortgage at the same time and intend to just re-mortgage for the remaining amount + the loan amount and pay it off that way.

Can't see why it'd be to your advantage to pay the loan off earlier tbh

The longer he waits, the more his property appreciates (if it continues to), the more required to pay back the equity loan................pay it off asap and more of that property appreciation will be his rather than the governments....

True, forgot about that caveat.

This has always been the governments angle.....package it up as an interest free loan and people will jump on it....when in fact the property appreciating effectively gives them the interest on the loan.

Added tot he fact that currently, the equity loan prevents you from remortgaging to a new lender at the end of your rate if you aren't/can't consolidate the equity loan.

I never liked this scheme at all.

Sarnie - With that comment what would you suggest to people that for example are already renting and would only really be able to save 5% deposit? Seems there is Help to Buy Mortgage Guarantee, Help to Buy Loan or Shared Ownership.

We live in the South East and looking to perhaps start a family but even a standard 1 bed flat is around the 160k mark.

[Sarnie]

Sarnie said:

This has always been the governments angle.....package it up as an interest free loan and people will jump on it....when in fact the property appreciating effectively gives them the interest on the loan.

Added to the fact that currently, the equity loan prevents you from remortgaging to a new lender at the end of your rate if you aren't/can't consolidate the equity loan.

I never liked this scheme at all.

[Sarnie]

GrumpyTwig said:

It's worked ok for me so far, but I'm in an area where property price rises are minimal so they will get little if nothing out of it and it got me onto the property ladder a bit easier/earlier.

Of course, but the equity loan is still there in the background and needs a plan for......a lot of people I speak to have no real idea what they are going to do about it apart from paying it off when the property is sold....

[Sarnie]

Challo said:

Sarnie said:

GrumpyTwig said:

Sarnie said:

GrumpyTwig said:

Surely you're better off using the interest free / none payment period on the loan to its maximum by not paying it off until you have to.

I bought my place on the h2b scheme back when I was earning half what I am now and have managed to fix my mortgage up until the same time as the interest payments would be due to start on the loan. Overpaid on the mortgage at the same time and intend to just re-mortgage for the remaining amount + the loan amount and pay it off that way.

Can't see why it'd be to your advantage to pay the loan off earlier tbh

The longer he waits, the more his property appreciates (if it continues to), the more required to pay back the equity loan................pay it off asap and more of that property appreciation will be his rather than the governments....

True, forgot about that caveat.

This has always been the governments angle.....package it up as an interest free loan and people will jump on it....when in fact the property appreciating effectively gives them the interest on the loan.

Added tot he fact that currently, the equity loan prevents you from remortgaging to a new lender at the end of your rate if you aren't/can't consolidate the equity loan.

I never liked this scheme at all.

Sarnie - With that comment what would you suggest to people that for example are already renting and would only really be able to save 5% deposit? Seems there is Help to Buy Mortgage Guarantee, Help to Buy Loan or Shared Ownership.

We live in the South East and looking to perhaps start a family but even a standard 1 bed flat is around the 160k mark.

My advice? Buy the best property you can with a 95% mortgage and your 5% deposit. Naturally there are going to be lot of circumstances where that just isn't enough to get what you want or need and the equity loan scheme is required. My main/only issue with it is how it was presented as a wonderous free loan from the government when it's not.

Someone I spoke to recently didn't even know it was an equity loan, they though they just owed the value of the loan when they bought the property, not that the value of the loan had risen with the value of their property etc.....

There are also people currently coming off two year rates and finding out that they can't remortgage away from the current lender as new lenders won't accept the charge over the property of the equity loan.....

[AyBee]

I suppose I see the value of the equity loan in being able reduce your own mortgage borrowings and therefore allow you to pay that off more quickly - then in 5 years time, you bind the equity loan into your new mortgage (if you can) or sell (if you can't).

If you staircase your repayments, do they value the property every time you want to pay a bit of the equity loan off?

[Sarnie]

AyBee said:

I suppose I see the value of the equity loan in being able reduce your own mortgage borrowings and therefore allow you to pay that off more quickly

Trust me, this isn't what people actually do............

[AyBee]

Sarnie said:

AyBee said:

I suppose I see the value of the equity loan in being able reduce your own mortgage borrowings and therefore allow you to pay that off more quickly

Trust me, this isn't what people actually do............

So does your opinion change of the product if this is how you treat it?

Although the temptation to finance a Ferrari FF to stick on the driveway could be too much

[pmessling]

AyBee said:

I wasn't on my high horse at all - was genuinely wondering what your concern was since I'm considering help to buy. £80/month on a £50,000 loan is an absolute bargain in my opinion and I'd snap the hand off of anyone who offered me that! You can pay the help to buy loan off at any point according to what I've read, is that not the case? Your point appears (to me, and I might still be wrong) to be that you borrowed £50k and have to pay off £60k because the house has gone up in value - but if you hadn't borrowed £50k, you either wouldn't have been able to afford the property at all, and so you wouldn't have got the benefit of any equity increase, or you wouldn't have been able to afford a place which has appreciated as much, and so wouldn't have got the benefit of a more expensive property increasing in value (on a % vs £ basis).

Edited by AyBee on Thursday 28th January 12:19

Okay i apologies for saying high horse, could have have said about your interest in the scheme.

Yes the kick in the teeth with the scheme is the interest with the value of the property which is inevitable going to go up. which changes the value of the loan. Unlike a normal lone the interest rate is set when brought and can't go up. So my 50k working on that the one for sale is now 300k is now 60k, so when i come to the end of the deal where could it be? 320k, 350K which in the scheme of things forever chasing to pay it off.

If i was to sell and the government take back the 20% then where i want to live for getting to work comes even greater as i would not be able to afford even where i am.

The plan now is to save 10% so about 30k and when i come to re mortgage at the end of the 5 years to add the other 10% into the mortgage.

So rough man maths i pay £920 a mouth currently so rough £11k a year. so over the period if i up it i can pay off 50k which when i come to remortgage for the amount i need to borrow i should only need to borrow 210k so should still be paying roughly what i pay now. give or take

Thats how i see it, so worth sicking it out till the end of the scheme pay it off, before paying the interest and continue with a normal mortgage.

[AyBee]

pmessling said:

Okay i apologies for saying high horse, could have have said about your interest in the scheme.

Yes the kick in the teeth with the scheme is the interest with the value of the property which is inevitable going to go up. which changes the value of the loan. Unlike a normal lone the interest rate is set when brought and can't go up. So my 50k working on that the one for sale is now 300k is now 60k, so when i come to the end of the deal where could it be? 320k, 350K which in the scheme of things forever chasing to pay it off.

If i was to sell and the government take back the 20% then where i want to live for getting to work comes even greater as i would not be able to afford even where i am.

The plan now is to save 10% so about 30k and when i come to re mortgage at the end of the 5 years to add the other 10% into the mortgage.

So rough man maths i pay £920 a mouth currently so rough £11k a year. so over the period if i up it i can pay off 50k which when i come to remortgage for the amount i need to borrow i should only need to borrow 210k so should still be paying roughly what i pay now. give or take

Thats how i see it, so worth sicking it out till the end of the scheme pay it off, before paying the interest and continue with a normal mortgage.

That's the way I see it - you basically have to be disciplined enough to be able to roll the loan amount into your mortgage at the end of 5 years, so growing your own salary so you can borrow more, having some capital appreciation so your equity value goes up (although so does the equity loan) and saving up as much as you can to pay the rest off. I understand your frustration on the loan amount increasing, but then if house values had gone down, they'd also have shared the hit with you...

[R11ysf]

pmessling said:

Okay i apologies for saying high horse, could have have said about your interest in the scheme.

Yes the kick in the teeth with the scheme is the interest with the value of the property which is inevitable going to go up. which changes the value of the loan. Unlike a normal lone the interest rate is set when brought and can't go up. So my 50k working on that the one for sale is now 300k is now 60k, so when i come to the end of the deal where could it be? 320k, 350K which in the scheme of things forever chasing to pay it off.

If i was to sell and the government take back the 20% then where i want to live for getting to work comes even greater as i would not be able to afford even where i am.

The plan now is to save 10% so about 30k and when i come to re mortgage at the end of the 5 years to add the other 10% into the mortgage.

So rough man maths i pay £920 a mouth currently so rough £11k a year. so over the period if i up it i can pay off 50k which when i come to remortgage for the amount i need to borrow i should only need to borrow 210k so should still be paying roughly what i pay now. give or take

Thats how i see it, so worth sicking it out till the end of the scheme pay it off, before paying the interest and continue with a normal mortgage.

I don't see the complaint here nor why you wouldn't recommend it (as stated in your first post). You bought a house you wouldn't be able to afford without the loan and you are gaining 80% of the capital growth. You are frustrated than if your house is now worth 300k then the loan is 60k not the 50k you borrowed. So?

You wrote "So my 50k working on that the one for sale is now 300k is now 60k, so when i come to the end of the deal where could it be? 320k, 350K which in the scheme of things forever chasing to pay it off." Well not really, lets say the house is 400k. That means you'll have made 80k profit and the government 20k. So the loan has enabled to make you over 100k profit. Yes you now owe more back but you've made 4 times the amount of the extra you owe. I honestly can't see what on earth you are complaining about.