I am helping to purchase mortgages – a £50,000 equity loan under the scheme and a £150,000 mortgage on UK property. Can I pay off £130,000 from my mortgage and only remortgage the remaining £20,000? Does this make sense?
David Hollingworth, director of broker L&C Mortgages, said: say Purchase help Equity loans, available in many forms in England, Scotland and Wales, have over the years helped many people climb the ladder or make their next move to a new, possibly larger property. If you live in the UK, you can take advantage of purchase assistance loans, typically up to 20% (40% in London) of the property value of a new property. These days it’s only for first-time buyers. The purchase price is supplemented by a minimum deposit of 5% and a mortgage.
You’re right, the equity loan is interest free for the first five years. Then in the 6th year he will be taxed at 1.75%, after which he will increase the CPI by 2% each year.
Help to Buy Equity loans can be partially or fully repaid at any time, but the minimum requirement is 10% of the property value, which is usually half of an equity loan, rather than a small regular amount.
This is primarily due to the fact that equity loans are repaid at the same percentage of the original current asset value. Therefore, if the property value increases, so will the equity loan balance. So if the value of a £250,000 property with a 20% equity loan increases to £275,000, the repayable equity loan rises to £55,000.
If you decide to repay part or all of your equity loan, you will be required to conduct an evaluation to meet the purchasing assistance agent’s requirements, which will incur costs and administration fees. To pay off the mortgage in full, the equity loan must also be paid off.
So while equity loans may appear to be interest-free for the next four years, maturing loans could also rise further as a result of changes in asset values.
We don’t know what the house price will be over time, so whether paying off the mortgage and leaving the stock loan alone will eventually be the cheaper option despite being interest-free at first. I don’t know. However, it’s also worth pointing out that governments share in the downside if property values fall.
Before you overpay your mortgage, it’s a good idea to check if there’s an early repayment charge (ERC). The fact that he’s only been on loan for a year usually suggests he’s still on his current deal. Some transactions may be ERC-free but worth checking as they can run into the thousands of pounds. It also helps to understand whether is still relevant.
If you decide to switch lenders and retain some or all of your equity loans, your options may be limited and it’s worth considering. Lenders can also set a minimum loan amount (often £25,000) for re-mortgage transactions, and switching to a new lender and maintaining the equity loan will also incur administrative costs for the buying assistance agent.
Overall, hindsight will have to determine whether it was the right decision to prioritize overpaying the mortgage, repaying the equity loan, or a combination of the two. Equity loans are interest-free at first, but it is a loan and ultimately depends on the market value or sale price of the home at the time.
How long does it take to set up a permanent power of attorney?
I’ve read about the backlog of a Lasting Power of Attorney (LPA) application. I have to become one of them as soon as possible because of my aging mother who can no longer think about money. What is the process for registering an LPA and how long does it typically take?
Ann Stanyer, Partner at Wedlake Bell and Senior Client Law Expert, said: This is becoming a widespread problem. A durable power of attorney is commonly executed when an individual is old, retired, or in poor health, but it is an essential document for everyone. Depending on where you live in the UK, the version you’ll create will be slightly different, but will essentially provide the same functionality.
All LPAs must be registered before use. If your mother has signed her LPA, witnessed her signature, and the certificate provider has attested to her knowledge and approval of her LPA, the LPA will be required by the Official Guardian (OPG) for registration. It should be sent to the office. This is where problems can arise.
On June 21, the then Minister of Justice responded in writing to Parliament regarding the length of time it would take to register an LPA. OPG is aiming to have him enrolled within 40 days. At the moment, that period is twice as long as he is for 82 days. Additionally, almost all of his LPAs registered this year have taken him over 12 weeks to register.
OPG has several reasons for this increase. It lists not only the Covid backlog, but also the required legal waiting period. This waiting period allows OPG to perform a check upon receipt of his LPA, after which he can begin his four-week period during which he can challenge the registration.
I don’t know if these reasons are the whole problem. It’s also a matter of staffing. OPG lost many staff during the pandemic. A mix of expat staff returning home due to Brexit or Covid and staff who simply don’t want to go back to work after the lockdown.
Apart from this, statistics show that LPA registrations are well below pre-pandemic levels, about 18.8% lower. That’s amazing. something is clearly not correct.
This does not put your mother at ease. Unfortunately, there is no quick registration service for urgent decisions. Until the LPA is registered, I have no authority to make decisions as a mother’s attorney under the LPA.
If your mother has the ability to make decisions for herself, she must continue to do so. Your mother can sign a general power of attorney in your favor. It has no registration requirements and takes effect immediately. However, the power will last as long as her mother retains her abilities. This is the only solution for this situation, but hopefully it helps.
The opinions in this column are for general information purposes only and should not be used as a substitute for professional advice. The Financial Times and the authors are not responsible for any direct or indirect consequences, including losses, arising out of your reliance on reply and to the fullest extent exclude liability.
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