After two years I could redeem the equity loan – about £43,000 – or invest my money elsewhere
Q I bought a property two years ago using the help-to-buy equity loan scheme as a first-time buyer. I want to redeem the equity loan – which is about £43,000 – at the end of this year. Does it make sense to do so or should I invest my money elsewhere?
OA
A If the value of your property has gone up – and you think it will continue to rise in the future – paying off your equity loan makes a lot of sense despite the fact that the loan is interest-free for the first five years. That’s because the sum you repay is not the same as the amount you originally borrowed from the scheme. Rather it is the percentage of the purchase price of your home that the original equity loan represents. If two years ago your equity loan was the maximum 20% of the purchase price you could get (40% in London), the amount you would have to repay now would be 20% of your home’s value now as determined by the valuation report from a qualified surveyor who is a member of the Royal Institution of Chartered Surveyors (Rics).
