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Help to Buy remortgage

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HomeRemortgageHelp to Buy remortgage

Help to Buy remortgage

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Last reviewed on 25th June 2022

With a Help to Buy equity loan, the government will loan you up to 40% of your property value. Although the loan is interest-free for the first five years, you’ll start to incur costs once this time period comes to an end. As a result, this can be the perfect time to remortgage a Help to Buy equity loan.

A Help to Buy remortgage can be straightforward with the right approach, but getting it wrong could result in you overpaying. There are a number of lenders that offer mortgages for Help to Buy, so finding the right deal isn’t always easy. A remortgage will also be difficult if you don’t have enough equity. Your reasons for a remortgage will also be a factor in how you’re assessed.

Our specialists have access to exclusive rates and have a wealth of experience in this area. You can make an enquiry with a specialist to get started. We’ll then calculate which lenders are the most suitable based on your circumstances.

Can I remortgage a Help to Buy property?

As Help to Buy is a government scheme, they’ll be terms and conditions attached to your mortgage. This includes restrictions for when you remortgage.

For instance, you’ll only be able to remortgage and borrow more money to:

  • Pay back your equity loan
  • Carry out a transfer of equity
  • Make structural changes to your home, if you’ve been given permission
  • Pay off mortgage arrears (in some cases)

Can I remortgage to pay off my Help to Buy equity loan?

A remortgage for a Help to Buy equity loan is often easier in comparison to other mortgage schemes. Your equity loan will typically stay as it is, but switching to a new deal can save you money on interest payments. The only change that takes place is that your new mortgage will replace your existing mortgage.

What if I’m in negative equity?

It’s not possible to remortgage while you’re in negative equity. When you initially took your equity loan, you would have paid a minimum 5% deposit. The remainder of the funds would have consisted of your mortgage and the government loan.

Mortgage lenders will only be prepared to offer you a new mortgage if you have equity in your home. If you’re unsure, you can ask our experts for help.

How to remortgage your Help to Buy

Help to Buy has proved successful over the years. Many people are now homeowners as a result of the scheme, whereas purchasing a property prior to the scheme wouldn’t have been possible. As the scheme was introduced in 2013, you may be approaching the end of your mortgage term. So, what does this mean from a financial viewpoint?

When mortgages revert to their higher rates, repayments will essentially increase. Do you stay put and pay the higher rates or do you try and remortgage to a better deal?

What you’ll need before you apply

Before you make your decision, here are a few factors lenders will check before saying yes:

  • Do you have equity in your home?
  • If so, how much equity do you have?
  • Is your Help to Buy an equity loan or mortgage guarantee?
  • Permission from your equity loan provider

What checks will lenders carry out?

Lenders will also carry out their usual checks before mortgage approval, such as:

Will I need permission from my equity loan provider?

You’ll need permission to remortgage before you can apply with a new lender, along with the following:

  • A redemption statement
  • An eligible mortgage lender
  • Your new lender’s charges
  • A professional valuation

Once you have permission, you’ll receive an ‘authority to proceed’ form. The permission granted is valid for six months so you’ll need to remortgage within this timeframe. Failing to meet this timescale may result in you having to apply for permission again.

ask a mortgage broker

How to use your equity to maximise your remortgage

If your property value has increased and you’ve repaid your mortgage on time, then you should have ample equity. This can be very beneficial, especially when trying to maximise your remortgage for your Help to Buy home.

Three great ways to maximise the equity for your remortgage are:

  • Take a remortgage at 75% loan to value again and withdraw some equity
  • Remortgage to a lower loan to value amount
  • Pay towards the balance of your equity loan

If you choose to pay towards the balance of your equity loan, the minimum you have to clear is 10%. If you have enough equity, you can actually use the remortgage to pay off your entire equity loan. That said, you don’t need to repay your equity loan in full when you remortgage. As a result, you can pay off your equity loan slowly. This is known as staircasing.

What if I have a Help to Buy mortgage guarantee?

If you took the Help to Buy mortgage guarantee, you may have fewer options in comparison to the Help to Buy equity loan. This is because the mortgage guarantee allowed borrowers to purchase a home using a 5% deposit.

If you used this scheme, you may have little equity and therefore may have to remortgage at 90 – 95% LTV. Furthermore, the remortgage rates available may not be the most attractive. This is because headline mortgage deals often start at 75% and get better as the loan to value decreases.

What should I do to start my remortgage?

If you’ve used the Help to Buy scheme and need to remortgage then do get in touch. Our specialists have vast experience in this field and can search for the best possible deals you’re eligible for.

Our advisors can help even if you have unique circumstances such as poor credit or you’re self-employed. You may have even been declined by another lender. Don’t panic, our advisors are here to give you expert advice. You can make an enquiry below or call today.

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About the author

Mortgage Advisor | More Articles

Martin is a senior mortgage advisor and has held a CeMAP qualification for over 15 years while also completing an MBA in Global Banking & Finance.