Just enter a few details above and we will show you the price we expect your property to be worth when the interest-free period on your Help To Buy loan comes to an end. In addition, we will show you the finances behind some of your options at the time including: Settlement, Remortgage and Sale.
The Help To Buy scheme started in 2013 as a Government funded aid for people struggling to get on to the housing ladder. The prospective purchaser needs to find just a 5 percent deposit whilst the Government then bridges the gap between the deposit and the mortgage. In London up to 40 percent of the property price was available as a Help To Buy loan - but in other parts of the country this was capped to 20 percent.
The loan is meant to help people who cannot gather enough of a deposit to take advantage of mortgage offers available or where the lender will not consider lending unless a larger deposit is provided.
Purchasers are given the Help To Buy loan 'interest-free' for 5 years from purchase date and only have to pay a £1 monthly management fee until the 60th month. From then on, the loan becomes an interest-only loan where a monthly interest charge is paid to the housing authority providing the loan. Rates are set against RPI and will increase by a minimum of 1 percent + RPI every year (that is one percent starting from 1.75 percent, so in the second year that would mean a rate of 1.86 percent).
The homebuyer can pay off the loan anytime after a valuation to determine the same percentage value as the property. So, a 20 percent Help To Buy loan would require 20 percent of the property value be paid back at settlement or sale. Regardless of whether the property price has gone up or down.
It can be difficult to determine at the outset what this scenario will be as five years seems a long way away for the any homebuyer but it should be considered as to what the plan would be once the loan becomes interest-payable.
We have created this calculator as a quick estimate of what we think the possible repayment situation could be once the 5 year period is up and the homebuyer is considering their options.
By entering the purchase details and the type of property purchased, we can gather data from various sources to provide a decent estimate of what to prepare for.
We look at the property value trend 5 years prior to the purchase date to determine the possible value of the property at settlement time. In addition we provide to alternative valuations - one where the prices remain stagnant, and another where the price trend does the exact opposite to what the previous 5 years forecast. Just to cover differing viewpoints.
These calculations can get complicated as the variables associated with the exact Help To Buy Loan amount taken and the issues of switching mortgages around prior to the 5 year point will alter the results.
We have assumed the interest rates for the purchase date are fixed for 5 years at the base rate + 2 percent and that the full Help To Buy loan amount available was taken. The mortgage term is assumed to be 25 years.
For a full calculation with the ability to input varying mortgages, custom Help To Buy loan amounts, overpayments and more - use the full Help To Buy calculators provided by TheMoneyCalculator at TheMoneyCalculator.com
Key Help To Buy Figures:
The maximum purchase price for a property is £600,000.
There is no minimum Help To Buy loan but the maximum is capped at £240,000 in London and £120,000 in the rest of England.
The purchase must provide at least 5 percent as a deposit, but a mortgage of at least 25 percent of the property value must be taken out on the property.
The interest rate after the five year interest-free period is set at 1.75 percent plus RPI increases every year. The minimum RPI increase is set at 1 percent. So the rate in year two (7) would be at least 1.86 percent.
The Help To Buy loan must be fully repaoid within 25 years of purchase or upon sale of the property.
Every month a £1 management fee is debited until the loan has been fully repaid.
Settlement of the loan is based upon the property value at the settlement date and the percentage of the property value the original loan was. This means that to settle the loan, the purchaser may end up paying more or less than the original amount. If they pay less, due to property values falling, they are not liable for any shortfall in the amount.
Any mortgage taken out in combination with a Help To Buy loan cannot be for more than 4.5 times the applicants (sole/joint) gross annual income. The debt to household income ratio also cannot exceed 45 percent.