Help to Buy Advice

Hi all,

Hopefully you can help a first time buyer get his head around this Help to Buy Scheme.

I was all set to buy a non-new build house last week, I tried getting a 90% LTV, but that got referred as they wanted 85% LTV which was agreed in principle from Santander (Abbey). It was a £77,000 house with a deposit of £11,550. I withdrew my offer after I found out the house was in a high flood risk area, so I started looking at new builds instead.

Here are my details:

Income: £24,000 (roughly £1,500 net a month)
Deposit: Roughly £10,000 currently available

The only credit I have oustanding is my Student Loan which just comes out of my wage.

I have spoken to a mortgage advisor and had the following mortgage agreed in principle with Nationwide on a Help to Buy scheme:

House Price: £114,950
Loan Amount: £82,760
Type of Mortgage: Repayment
Term of Mortgage: 35 years
Deposit: £32,190 (Including £9,200 of my own money)

Fixed Rate: 3.39% for 5 years

Total amount you must pay back: £151,688
APR: 3.9%

60 payments at a fixed rate of :3.39% £336.79
Followed by
360 payments at a variable rate: currently 3.99% £362.57

It all looks affordable on paper, I'm just not really sure what happens when it comes to paying back the loan.

So my questions are:

• After the 6th year at 1.75% what would I be looking to roughly pay every year on RPI + 1%?

• What problems might I have when I come to sell?

• Does this look like I could be stretching myself too far when it comes to paying back the loan?

• Would it be a good idea to, say, put £170 into an ISA each month and when it comes to year five pay back £10,000 of the loan?

• Should I avoid the help to buy scheme and keep looking at properties around £80,000 with a 85% LTV mortgage? Obviously it wouldn't be as nice as a new build.

I understand there's a lot of stuff I should be asking my mortgage advisor, but I want to know what others think.

Thank you very much, I appreciate any help or advice!