A Help to Buy remortgage can be simple when structured correctly. Many borrowers struggle to do this as either their LTV (loan to value) is too low or because they’re unable to find a suitable lender. Another stumbling block can be having little or no equity.
On a more positive note, there has been a recent surge of lenders entering the Help to Buy mortgage market. The specialists that we work with also have access to exclusive deals and have a wealth of experience in this area. You can make an enquiry with a specialist below to get started.
Important Help to Buy remortgage information
The Help to Buy scheme 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, a lot of Help to Buy borrowers have or are approaching the end of their mortgage term. So, what does this mean from a financial viewpoint?
When mortgages revert to their higher rates, monthly mortgage payments will essentially increase. Do you stay put and pay the higher rates or do you try and remortgage to a better deal?
Before you make your decision, here are a few things lenders will consider before giving you the green light:
- Do you have equity in the property?
- If so, how much equity do you have?
- Is your Help to Buy an equity loan or mortgage guarantee?
- The condition of the Help to Buy property
In addition, lenders will carry out standard checks before mortgage approval, such as:
- Your personal profile (age, employment type, etc)
- Affordability – how much can you borrow?
- Credit history
Remortgage a Help to Buy equity loan
Remortgaging your Help to Buy equity loan is often easier in comparison to the Help to Buy mortgage guarantee. Your equity loan will typically stay as it is. The only change that takes place is that your new mortgage replaces your existing mortgage. This is essentially what a remortgage is, irrespective of it being under the Help to Buy scheme.
When you initially took your Help to Buy equity loan, you would have placed down a minimum 5% deposit and received an equity loan from the government at 20%. The remainder of the funds would’ve been made up from the mortgage you took. At this point, your mortgage would have been 75% loan to value (if you used the 5% minimum deposit).
Using equity to maximise your loan amount
If over the 2 or 5-year term your property value has increased and you’ve met all of your mortgage repayments on time, then you should have a lot more equity in the property. This can be very beneficial, especially when trying to maximise your remortgage.
The main three ways to maximise the equity in 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 do 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.
The main thing here is to establish the deals that you’ll qualify for. Getting a more favourable rate is the entire reason for the remortgage, so do take your time on selecting deals that you’re happy with.
Lower loan to value rates allows borrowers to access better deals. This is because lenders are taking on less risk, so in turn, allow more flexibility when setting their rates. Our advisors can also check to see the rates you’re eligible for depending on your financial circumstances.
Remortgage 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 did use this scheme, you may have little equity in the property and therefore may have to remortgage at 90 – 95% LTV. If you find yourself in this position, the deals available may not have the most attractive rates. This is because headline mortgage deals often start at 75% and get better as the loan to value ratio decreases.
Nonetheless, the current mortgage market is very competitive. Our advisors have access to some great products so get in touch and we’ll let you know what you’ll be eligible for.
Help to buy remortgage experts
If you used the Help to Buy scheme and now need to remortgage then do get in touch. Our specialist brokers have a wealth of experience in this field and can search the entire market for the best possible deal you’re eligible for.
Our advisors can help even if you have unique circumstances such as adverse credit or you’re self-employed. You may have even been declined by another broker or lender. Don’t panic, our advisors are here to give you expert advice. You can make an enquiry below or call today.