Anyone else not know the fuckety fuck they're going to pay back help to buy?

[cheezits]

Somewhat naively used help to buy equity loan for 20% of value of our £245k home

Planned to remortgage in 5 years - interest rates have poo pooed that

House value has gone up to £330k ish - no chance we can save up 20% or even 10% of that off

On to interest payments we go.. but only a few years until they become unaffordable.

Fucked! Fuckety fucked!

Am I alone in this poor financial choice?

The interest rates are so low on the HTB part that no matter how far prices rise you will always be winning.

You loaned £49k and that is now £66k; but the £195k you bought is now worth £267k.

Most people see this as you have made £330k - £66k - £195k = £69k profit (on paper).

You don’t want to move so no problem really.

As has been said above, if CPI is 8% then in year 6 you will be paying 2.11% on the £66k which would be about £283 a month, and maybe 5% on the balance (£173k?) which would be about £1100 a month.

Exactly.

This makes no sense?

You would have rather the value of your final home had dropped in value? You aren’t upsizing, price rises only benefit you. Just because you are only getting the benefit on 80% doesn’t mean you haven’t done very well financially out of the last 5 years.

If you can’t afford to pay the HTB off (which you shouldn’t unless you get a lump sum from somewhere) then this house is beyond your means! Yet you can continue to live in it, fairly cheaply.

I would focus on overpaying your mortgage. Then pay off the HTB when the rate becomes higher than your remortgaging rate. Probably 5-10 years time.

Actually even if you got a lump sum, you should:

Save if rates > Mortgage rate
if Mortgage rate > Saving rates, then overpay mortgage
if no Mortgage left, AND savings rates < HTB rates then pay HTB off.

Honestly, your situation is excellent.

Thanks that's helpful.

We bought the house purely off my husbands income (£55k) so we are feeling the squeeze, and as you said, this house feels outside of our means so I panic about it and feel like we're going to lose it or have to sell all the time.

In the next few years I will have a proper income again and we would remortgage, taking into account my salary too and it would make it possible to add help to buy to the mortgage. Just rates are batshit.

We don't have any money spare to overpay mortgage, or to save really. Things will change over next few years hopefully once I am actually earning after paying ££££ in childcare every month.

>Things will change over next few years hopefully once I am actually earning after paying ££££ in childcare every month.

May I ask how much you earn, how many hours you work and how much you pay in childcare and commuting?

Housebuilders did not "luck out". They poured donations into the Tory party and ensured that every scheme for FTBs was just a way of inflating their profits at the expense of ordinary people

@cheezits

Somewhat naively used help to buy equity loan for 20% of value of our £245k home

Planned to remortgage in 5 years - interest rates have poo pooed that

House value has gone up to £330k ish - no chance we can save up 20% or even 10% of that off

Assuming that you had a 10% deposit for the 80% you were buying, that means of the £245k original purchase price, £24.5k was your own equity, £49k came from the equity loan scheme and the remaining £171.5k was your mortgage.

You have presumably paid off a bit of that mortgage now but even if you still owe £170k the £330k current value of your home breaks down as £66k owed to repay the equity loan, £170k owed to the mortgage company and £94k which is your own equity - that is massive!

Sell up and buy a different property for whatever you can afford to buy with that £94k deposit and no equity loan - you are in a much better position than you would have been of you had just rented and kept saving instead of using this scheme. At best you would probably only have saved a small amount more. Maybe you aren't in as lovely a position as you wanted but you aren't actually worse off.

Yes, help to buy was a misnomer. It was "help to build"

for the next few years we have 0 intention of paying it off - we will leave it as interest only for as long as the rate payable on it is lower than the rates for our mortgage.

We just see it as having 1 interest only mortgage and 1 repayment.

We're also paying out a fortune in childcare fees which will reduce in Sept next year and so we've gained wonderfully by having 20% of our homes value on 0% interest for the last 5 years!

I guess this depends on area too, we bought with help2buy twice - once in 2014 in a 160k 3 bed detached house, we sold it in Jan 2020 for the same as we paid for it, clearing the 20% H2B loan and having built up 20k equity in repayments in the 6 years.

We bought our now house in Feb 2020, 4 bed detached which we don't intend to move from - for £224k. so used £12k deposit and 45k H2B again, so we've had 10 years almost of having part of our mortgages interest free. We're in the NE and 225k for a 4 bed detached has been the average price in our area for over 10 years now - prices haven't increased in that time much here at all.

I don't think Help to Buy was ever intended as a route to get instantly to your forever home as your first time purchase. It works brilliantly if you use it as a stepping stone to get you on the first rung of the property ladder because it means your equity increases as house prices rise, as compared to renting while you save up more deposit, because sometimes house prices are rising quicker than a FTB couple can save. No matter how big the extra is that you owe for the 20% you borrowed, your own equity will have increased by 4 times more than that (plus whatever you have paid off from the mortgage) which makes it more feasible to buy your second-rung-on-the-ladder using that multiplied equity. Forever homes come along later in life.

I'm sorry you are in this difficult situation OP, but I think you are mistaken in blaming HTB for your woes. If you had used HTB to buy something that was clearly going to be too small/too inconvenient for the long term but ok for 5 years, with a plan to sell up after 5 years, do whatever possible to increase income and mortgage potential during the course of those years, and see what you could afford at that point for stage 2 of your journey to your forever home, then you would be in a much happier position. You would then have been borrowing less over the last 5 years so more able to make overpayments, and much more able to increase your borrowing more significantly now.

I'm definitely fucked. I have a 35k help to buy loan. The plan was to save during the 5 years and pay it off when the interest kicked in. Two weeks after the purchase of my house I discovered I was pregnant. Now I'm a single mum with zero support from the father or any childcare. Not a prayer of me being able to save a penny the next four years. I struggle to sleep most nights worrying about losing our home.