Remortgage With Help to Buy
Michael Siviter and Noel Redfern explain all about remortgaging with Help to Buy.
Podcast approved by The Openwork Partnership on 04 April 2023.
Can you remortgage with Help to Buy? How does it all work?
Yes, you can absolutely remortgage with Help to Buy. Typically, a lot of people with a Help to Buy loan took a five year fixed rate mortgage to run alongside it. The reason was that they planned to review both the fixed mortgage and the Help to Buy loan at the same time.
Help to Buy loans are interest free for the first five years, so it’s a good time for people to review both their fixed mortgage and the loan.
People often think they’re stuck with their existing lender at the end of their fixed deal, but the reality is you can still move it. That’s the case even if you’re not repaying the Help to Buy part of the loan at this point. You can still move from lender to lender.
When is it a good time to pay off a Help to Buy loan?
I think people’s aspirations are always to own all of their house. With Help to Buy the first five years is interest free. An ideal time to repay it is when your property has gained enough value for you to use your equity to clear the Help to Buy loan.
How long does it take to remortgage with Help to Buy?
The process can often coincide with remortgaging, as long as you allow a good amount of time to get organised. We typically recommend that to anyone that needs to remortgage.
With Help to Buy There are a few additional points and factors that you need to think about. For example, you’d need to appoint a RICS chartered surveyor to value the property. That can sometimes take a couple of weeks to sort out, so we’d always suggest that you allow yourself a good amount of time.
You should be able to get everything to coincide. In terms of the time, the remortgage will take the same length of time with or without Help to Buy.
Do you need a solicitor to remortgage with Help to Buy?
Yes, you do need a solicitor. Most of the companies that we mortgage with tend to help you out with that, by supplying one that will do a certain amount of the work free. Be aware that typically there are a few extra charges around the Help to Buy in dealing with paying the loan off alongside the extra survey needed. But yes, you definitely need a solicitor.
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Is remortgaging the best way to pay back Help to Buy? Are there any other options?
You can repay Help to Buy at any point, whenever you wish. Obviously the best way if you had the money in the bank would be to repay it all in cash – that would be wonderful for a lot of people, but most of us aren’t in that fortunate situation. It’s a lot of money.
So remortgaging is usually deemed as the right time to do it. The only restriction on the loan is that it has to be repaid within a 25 year term.
The Help to Buy loan is another secured loan on your property. So it’s similar in its setup as your mortgage. Incorporating it at the right time into a mortgage repayment is definitely the way to go unless you’ve got the cash ready in the bank.
How much does it cost to pay back Help to Buy?
Let’s say you take a 20% equity loan when you bought the property. When you’re looking to remortgage, the house will be valued by a RICS surveyor. If you want to repay the loan, you will need to pay back 20% of the value at that time.
The government loaned you the money in Help to Buy – and they win, as long as the property value has gone up. But if house prices were to fall, it would lose. The amount you repay is always 20% of the property value at the time you decide to do it.
It makes sense to repay the loan as early as possible, presuming that house prices will continue to increase.
How can a mortgage broker help with my Help to Buy remortgage?
We’d always recommend having a mortgage broker to help with the process. A lot of people find remortgaging quite daunting, and it can be stressful. There’s lots of extra bits and pieces that can pop up along the way, even without having Help to Buy on the property at the same time.
I’ve had clients before who have tried to sort it out through their bank or direct with a lender. They hadn’t known that they needed to get a chartered surveyor to value the property, which is the starting point when you look to repay the loan.
Having a broker helps you along the way and ensures that everything is ticked off, so there’s no hiccups or hurdles. That’s why we’re here – to help with the process. We don’t just advise you, we’ll take on some of the work, including liaising with the different people – the solicitor, with the Help to Buy contact and your surveyor.
A Help to Buy remortgage does tend to be that bit more complicated. We will look at the different lenders and the options to bring out the most suitable deal for you.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up with your mortgage repayments.
You may have to pay an early repayment charge to your existing lender if you remortgage.
Approved by The Openwork Partnership on 04 April 2023.