Are you better off without a Help to Buy Loan? Worked example with costs!

In this video, I compare the cost of buying a property with and without a Help to Buy Equity Loan when you have a 10% deposit to find out which is cheaper. I look at the costs over a 25-year period to see whether you would be better off without it. I also consider the pros and cons of each option.

Welcome 00:00
Introduction 00:52
Assumptions for example 01:47
Example 03:51
- David's costs (without HTB loan) 04:46
- Lisa's costs (with HTB loan) 06:50
- How do their costs compare? 09:57
- What if they sold after 5 years? 12:00
Closing thoughts 14:03

Hope you enjoy!

REASON FOR ASSUMPTIONS/ SIMPLIFICATIONS
1. Using a 5 year fixed rate mortgage: the cheapest fixed rate mortgage I could find for a 10% deposit was a 5 year fixed rate mortgage, so continued with this for consistency. Also, it works well with HTB loan which is interest free for 5 years.
2. Borrowers have access to the same mortgage rates: I don't have access to a search engine that allows me to search for HTB mortgage rates, so just used MSE comparison site.
3. CPIH = 2%, or RPI = 3%: these inflation rates are the government's targets. Also, these are the averages over the last 25 years.
4. All mortgages rates based on current market: I can't see into the future, so must use what is available to me now.
5. Mortgage rates are from MSE comparison site: readily available.
6. Value of property is £400k for 25 years: for simplicity.
7. HTB management/admin fee not included: this is £1 a month. It's a fairly small amount and would not have changed the results in the example.

ABOUT ME
I'm Lemuel. I'm not a financial advisor. I'm not an expert. I'm just a regular guy that enjoys talking about how we can do better with money.
If you want to learn more about how you can do better with money, then subscribe to the channel and hit the notification bell so you get an alert whenever I upload a video.

LINKS/ TOOLS USED
Help to Buy Equity Loan website - https://www.helptobuy.gov.uk/equity-loan/equity-loans/
MSE mortgage comparison website - https://www.moneysavingexpert.com/mortgages/best-buys/
Mortgage Calculator - https://www.mortgagecalculator.uk/
Lee Everitt - Property Advice - https://www.youtube.com/watch?v=5ulkVFe8ugE

TOPICS
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DISCLAIMER
This video is not meant to address the specific circumstances of any particular individual. It is created for educational purposes only. You should not rely upon it as legal, financial or professional advice, or a substitute for it. I do not accept any liability whatsoever for errors, omissions or misstatements contained therein. You should consult a suitably qualified professional if you require specific advice or information.

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