Paying Off Help to Buy
You can pay back part or all of your Help to Buy equity loan at any time, however it is usually more cost effective to do it at the same time as a remortgage as there will be legal costs involved. This also gives you the opportunity to release some of the equity from your property to use towards the amount needed to repay.
Most mortgage lenders have specific Help to Buy mortgage products so even if you have savings to repay the equity loan, we would recommend reviewing your mortgage to make sure you are on the most competitive deal!
The amount owed is based on the equity loan percentage taken when you purchased the property. Usually, this was 20% (or 40% in London) of the property purchase price. However, it may have been less if you had more deposit.
Steps to pay off Help To Buy Equity Loan
1. Speak to a mortgage broker to find out your mortgage affordability and confirm if you are able to release equity from your property.
2. Instruct a RICS qualified surveyor to provide a market valuation report and confirm amount required to repay the HTB equity loan.
3. Apply for the remortgage with your mortgage broker.
4. Contact Help To Buy and complete their application to remortgage.
4. Instruct a conveyancing solicitor to complete the legal requirements for Help to Buy and remortgage for the mortgage lender.
Partial buy out of Help to Buy Equity Loan
If you are unable to pay back the full percentage borrowed, you can pay back a minimum of 10% instead but you can not leave less than 5% of the market value of the property to repay.
Paying back part of your equity loan will reduce the monthly interest payments made from the sixth year of taking the loan, as well as help you retain a higher percentage in your home.
If you partially buy out Help to Buy, you will need to apply to borrow more money with Help To Buy and select a Help To Buy specific interest rate with your mortgage lender. There may also be higher legal costs, if any part of the Help to buy loan is left in place.
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Frequently asked questions
They have access to many different mortgage products from lots of lenders. Having access to a range of products and lenders means you aren’t tied to just one lender’s criteria like you would be if you applied for a mortgage with your bank or building society. They are also there to deal with the whole application process – which can be difficult especially if you’re remortgaging for the first time, or looking to borrow additional money.
Yes, some Mortgage Brokers do usually charge a fee. But at 177 Mortgages, all our services are fee-free.
When you are getting close to the end of a fixed period your lender will get in touch to tell you that you will move to their SVR. You can now look at all of the remortgage options available to you. This could be simply moving to another product with the same lender – which is a Product Transfer. Alternatively using a mortgage broker allows you to review all of the remortgage options available to you based on your current circumstances.
Most people will remortgage to a new lender because they are offering a more competitive interest rate than their existing lender, a mortgage broker will be able to compare the rates from your existing lender to the rest of the market and let you know what the best option is for you. Often lenders will offer new clients free valuation and free legal works or cashback towards their own chosen solicitor to make remortgaging even more cost effective.
Some people remortgage to a new lender to borrow further money as their existing lender may not lend as much as a new lender. A mortgage broker will be able to compare different lenders’ affordability calculators and let you know what their maximum loan is based on your circumstances.
A mortgage broker will be able to confirm your maximum affordability across lenders to help you increase your mortgage and find the best rate for your circumstances. You can borrow more on your mortgage to use for home improvements, gift to family or friends to help them purchase a property, for personal use or even to pay off debts.
Yes, this is a very common way to raise the money from the property during a remortgage to pay back some or all of the Help to Buy Equity Loan.
Every lender has their own way of calculating how much they will lend based on your income and monthly credit commitments. It’s important to be accurate in the figures you provide during any application as you will need to support these figures with documentary evidence – things like payslips and bank statements.
Yes many lenders accept remortgages where the Help To Buy Equity Loan is in place. A mortgage broker will also be able to help you calculate if it is possible to raise capital from the property to pay back some or all of your Help to Buy Equity Loan.
When you are ready to proceed to a full application it’s important that you have all the documentation available to ensure it can be submitted quickly. So, it’s a good idea to start preparing and collecting these whilst you are looking for a property. These will include:
- Proof of identity – passport or driving licence
- Proof of income
- proof of any benefits you receive
- P60 form from your employer
- your last three months’ payslips
- statement of two to three years’ accounts
- tax return form SA302
- Bank statements of your current account
- Utility bills
The information on the application form must match the documents you provide. For example, don’t round up your salary – enter the amount exactly as it appears on your payslips. The documents need to be originals and often home-printed online statements and bills won’t be accepted unless they have been certified by your bank, utility provider or by your solicitor. You will also need details of the property you want to remortgage.
Yes, this would decrease the amount of interest that you pay overall but some products have restrictions on the amount that you can overpay. Most fixed-rate mortgages allow 10% of the outstanding balance to be paid off each year. So, if you plan to make large overpayments it might be worth looking at products that have no early repayment restrictions. We will ensure we find the right mortgage for you.