Help-to-buy loan redemption

[Petrolsmasher]

Hi Chaps,

Im looking to pay the helptobuy equity loan off on my property, this is 20% of the value of the property.

Now im stuck between the best option to do.

I could either remortgage for the amount OR pay off the loan myself with my own cash.

I would prefer to pay it off in cash as it saves fees and is less hassle, however what is the safer option?

Im mainly concerned about selling my property for less than i bought it, does it make a difference which way i did it? As even if it plummeted 15% id still owe the mortgage company regardless wouldent it so would matter if it was on a remortgage or my own cash?

Im planning on paying this off now so that i can then sell it with less hassle.

[Petrolsmasher]

Anyone have any idea at all?

[Sarnie]

If the value of the property is reducing then I probably wouldn't be increasing your LTV by consolidating the HTB loan into the mortgage...…..if the value of the property is reducing, then so is the value of the HTB loan, so if you have the cash then it maybe a good time to get rid of it cheaply......

[alistair1234]

If you house price goes down then the government take a hit on their 20% and you on 80% instead of the full 100%.

Are you still in the interest free period? If so, why pay it off? Either pay it off after 4 years and 11 months or if you sell sooner, just pay it off just before you list your property and hope for a lower valuation than what you eventually sell it for.

[aquarianone]

I managed to roll mine into the remortgage after the 5 years were up - switching from Natwest to Lloyds.- 1.9% for 5 yrs.

Was pretty painless to be fair, just need to get your own survey done and start the process, roughly £500 for a survey and the h2b fee's.
(just make sure you start a month or so before you need to it all done.)

Worked out well enough with a slightly higher valuation on the mortgage compared to the H2b survey, so slightly less to pay back overall.

If you're at the end of the 5 years and it's worth less, then don't pay it off and hope for a low(er) valuation when you come to sell, guess it depends on location and how long you're planning on sticking around there.

For me it was no brainer as prices are on still up around Farnborough.

[Nano2nd]

i also rolled mine up into the mortgage at 2 years (had a 2 year fix) okay so i lost 3 years interest free, but i think this was a price worth paying i've fixed at 2.1% for 5 years, prices are still climbing and i think interest rates will do the same.

i did manage to get the valuation at the same as i paid, though the company admitted the "retail" price would be higher, i also didn't like it hanging round my neck... plus now i can crack on with my loft conversion

as above my valuation was £400 and then you get copped conveyancing and admin fees on top, so budget a grand to get it paid off

[Nano2nd]

as an aside, i think plenty of people will be in for a shock at the 25y point when they realize they owe 2-5x what they originally borrowed... i recall talking to my neighbor about it and saw the look of panic in his eyes when he twigged that his £120 HTB could easily end up at 300k!

[MrOrange]

Assuming a flattish market I think you’re probably better off clearing the HTB before the 5 year interest period kicks in - saves getting caught paying interest and maybe restrictive mortgage choices. You could pay half in cash and half added to your mortgage but if you had, for arguments sake, lots of free cash earning crap rates elsewhere then I’d clear it all unless the market is nosediving.

[Petrolsmasher]

Thanks for the replies so far guys.

Im at the end of the 5 years im on about year 7 at the moment but looking to sell the property this year.

I have the cash to pay the loan off, so im thinking this is probably the more sensible option? As remortgaging for a higher amount costs more in fees and is a bit more complex?

I have a feeling my property will be valued more than i paid for it meaning ill pay a bit extra on the loan, but judging by the market in my area i can see me losing 10-15k of the price i bought it at.

So does it make any difference whether i remortgage for the higher amount or pay the loan off myself? As either way i owe the mortgage company dont i so neither option will cost more (apart from the fees to pay it off which are slightly higher to remortgage)

[Nano2nd]

Petrolsmasher said:

So does it make any difference whether i remortgage for the higher amount or pay the loan off myself? As either way i owe the mortgage company dont i so neither option will cost more (apart from the fees to pay it off which are slightly higher to remortgage)

no, you owe the mortgage company for the mortgage and the Government (via the Management Co) for the HTB loan. Basically you'll save on some conveyancing fees if you pay the loan off direct to management co - you still need the independent valuation and the £200 charge to redeem it though.

[Petrolsmasher]

Nano2nd said:

Petrolsmasher said:

So does it make any difference whether i remortgage for the higher amount or pay the loan off myself? As either way i owe the mortgage company dont i so neither option will cost more (apart from the fees to pay it off which are slightly higher to remortgage)

no, you owe the mortgage company for the mortgage and the Government (via the Management Co) for the HTB loan. Basically you'll save on some conveyancing fees if you pay the loan off direct to management co - you still need the independent valuation and the £200 charge to redeem it though.

Yeh and plus i wont be paying extra mortgage costs until the house is sold.