Hi,
My partner and I bought an apartment in Dec 2011 using the FirstBuy scheme (5% deposit, 20% equity loan, 75% mortgage).
Once the first 5 years are up we start to pay interest on that equity loan at 1.75% which will then rise each year (by RPI + 1%, so year 2 would be something like 1.86% based on 6% RPI). Realistically it shouldn't be more than £40-£80 a month over a 5 year period, so not much money, but it is all "wasted" as it only pays interest.
I was looking into paying off the equity loan (or at least half of it now) by adding it onto the mortgage, which would immediately start to cost more per month but wasn't sure if it was even worth it. We don't intend to be there more than another 4-5 years, but we cannot possibly predict the future.
Some details very rough details, I am at work and don't have paperwork to hand.
Our mortgage is for just under £68000, interest rate is around 4% (3.8% maybe? I know I should know but I haven't looked at it for a while) fixed for 3 years then variable.
The purchase price was around 90k, valued slightly higher. One on our road sold very recently for £110k and that wasn't quite as nice :rotfl:
The equity loan is 20%, and you are only able to pay off 10% min at a time. So the min amount to add to the mortgage would be around about 11k based on the previously sold property.
So basically are we better off putting half or all of the equity loan onto our mortgage. Or should we just wait it out, pay the interest for a few years then pay off the equity amount when we sell?
I cannot post links to the FirstBuy doc, but if you google "FirstBuy buyers guide" there are a few PDF links which contain all the relevant info.
Thanks in advance to all!
My partner and I bought an apartment in Dec 2011 using the FirstBuy scheme (5% deposit, 20% equity loan, 75% mortgage).
Once the first 5 years are up we start to pay interest on that equity loan at 1.75% which will then rise each year (by RPI + 1%, so year 2 would be something like 1.86% based on 6% RPI). Realistically it shouldn't be more than £40-£80 a month over a 5 year period, so not much money, but it is all "wasted" as it only pays interest.
I was looking into paying off the equity loan (or at least half of it now) by adding it onto the mortgage, which would immediately start to cost more per month but wasn't sure if it was even worth it. We don't intend to be there more than another 4-5 years, but we cannot possibly predict the future.
Some details very rough details, I am at work and don't have paperwork to hand.
Our mortgage is for just under £68000, interest rate is around 4% (3.8% maybe? I know I should know but I haven't looked at it for a while) fixed for 3 years then variable.
The purchase price was around 90k, valued slightly higher. One on our road sold very recently for £110k and that wasn't quite as nice :rotfl:
The equity loan is 20%, and you are only able to pay off 10% min at a time. So the min amount to add to the mortgage would be around about 11k based on the previously sold property.
So basically are we better off putting half or all of the equity loan onto our mortgage. Or should we just wait it out, pay the interest for a few years then pay off the equity amount when we sell?
I cannot post links to the FirstBuy doc, but if you google "FirstBuy buyers guide" there are a few PDF links which contain all the relevant info.
Thanks in advance to all!