How do you Repay the Help to Buy Equity loan?
People are generally aware of what happens before and throughout the first five years of a loan, but how you repay your help to buy equity loan remains a mystery.
For the first five years, equity loans are interest-free, but after that, you’ll have to start paying interest. In the sixth year, a fee of 1.75 percent of the loan’s total value will be paid. Following that, the fee would be adjusted annually to keep pace with inflation. The Retail Price Index (RPI) + 1%, a methodology devised by the Office of National Statistics, is used to calculate this. It’s critical to understand that the interest you’re charged does not go toward paying down your equity loan.
Help to Buy Interest Calculator
A Help to Buy Interest Calculator is a tool that determines how much extra will be added to your monthly repayment based on many variables such as, the size of your help to buy loan, the current inflation rate, Year 6 monthly installments, and Year 7 monthly repayments. It is a simple and easy method to use.
4 things you need to know about paying your loan back:
- Depending on whatever day of the year you finish your home purchase, interest payments on your equity loan could be much more expensive after five years. For example, the months January to March tend to be the cheaper months to buy with help to buy, compared to December being the most experienced.
- Property prices fall – this is a positive because you will have to pay back a less amount than you borrowed initially.
- Property prices increase – this is a negative as you will have to repay the government more than you initially borrowed.
- Properties stay the same – If this is the case you will have to repay the same amount that you borrowed.