Remortgage To Repay Help To Buy

Straightforward mortgage advice from expert brokers. Finding the perfect mortgage just for you without the jargon. 

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Straightforward mortgage advice from expert brokers. Finding the perfect mortgage just for you without the jargon. 

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Remortgage To Repay Help To Buy, Vantage Mortgages

Remortgage Help to Buy

All about remortgaging a Help to Buy loan with Adam Messer.

Can you remortgage with Help to Buy? How does it work?

Yes, you absolutely can – and this is one of my favourite things to help with. There is nowhere near enough information about Help to Buy and what happens once you’ve done it. 

It’s not available any more for new buyers, but when it was, builders and developers were very keen to push people towards Help to Buy, saying it gave you free money. It’s certainly not free money – and now we find that most people don’t fully know what they need to do with their Help to Buy equity loan. It’s really important to educate people on it, and most importantly, how to get it paid off.

In terms of remortgaging, you can do it without paying off the loan, but not many lenders will let you do this. If your fixed rate deal comes to an end, you might not find the best deal with your current lender – but if you don’t want to pay off Help to Buy yet, you can move lenders and keep Help to Buy in place.

But it’s really important to pay off Help to Buy or a chunk of it as soon as you can – and we can do that by remortgaging to a new lender and borrowing more money to pay back the loan.

When is it a good time to pay off a Help to Buy loan?

As soon as you possibly can. Five years is about the right time because most people took a five year fixed deal – that was the norm. It’s not now, with rates as they are, but it was then.

Once you get to the end of your five years, or perhaps four years if you chose a two-year deal twice, hopefully your house has gone up a bit in value. With a new build the value goes down a little bit first because it’s not brand new any more, but five years on, it should have gone up in price.

We were all expecting house prices to dip during Covid but they didn’t – far from it. They shot up. Now, your house should be worth more than when you bought it. That gives us extra equity we can use to repay Help to Buy.

How long does it take to remortgage with Help to Buy?

When we talk about remortgaging at the moment, we talk about doing it six months early. That’s really important at the moment with interest rates going up. We need to remortgage early so that your new mortgage is ready and waiting for you, and you’re protected against any more rate rises. A mortgage offer will last six months.

When you repay a Help to Buy, you need a valuation from a surveyor. We can help people find a surveyor. The Help to Buy office needs to know how much you need to repay them. But that valuation will only last three months, so we have to do a two-stage process.

First we make an educated guess at what your house is worth, and we do your mortgage application based on that to secure your rate now. We can make some tweaks to that before you complete. That offer lasts six months.

Then, with three months to go, we get the Help to Buy valuation done and sent in, and Help to Buy tells us how much we need to repay. It’s 20% of the property value, unless you’re in London where it could be up to 40%. That’s the thing to remember: you borrowed 20% of the property’s value – not an exact sum of money.

We get everything done with three months to go and it all completes at the right moment. So it can be up to a six month process – but it can also be done faster. With Help to Buy there are a few steps – I send them a form, they send some bits back, they talk to the solicitor and, as with any government organisation, these things don’t happen overnight. It’s no good expecting it to be done in two weeks, it can take a while. We try to do it as early as we can so that evaluation won’t expire.

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Do you need a solicitor to remortgage with Help to Buy?

Yes, you do. Your solicitor will deal with all the money as you move from one lender to the next. The new lender will send the solicitor the money to pay off the old mortgage. That’s the normal remortgage process.

The solicitor also transfers over the deeds and does all the paperwork in the background. A basic remortgage doesn’t cost much at all and can often be free. Most lenders will give you a free legal service or enough cash back to cover your own solicitor – or ours if we’re helping you. Either way, it doesn’t cost you anything.

With Help to Buy repayment, we need that same solicitor to handle the money from the new lender, pay off the old lender and pay off Help to Buy. They’ll swap the deeds over and make sure everyone knows what’s going on.

So yes, we do need a solicitor and they’ll charge probably £200 to £300 to do that additional Help to Buy work – the remortgage bit will pretty much be free.

Is remortgaging the best way to pay back Help to Buy? Are there other options?

You could just do it with cold, hard money. You might win the lottery or receive a gift from your family – if you’ve got a lump sum of money you can do it that way.

You could potentially stick with your existing lender and do what we call a Further Advance, where you just borrow more money from the same lender.

You might decide to sell the property to pay off Help to Buy, but if you move and buy another property, Help to Buy isn’t portable – you can’t take it to the new house. It has to be paid off to enable you to move. But remortgaging is the way that most people do it.

How much does it cost to pay back Help to Buy?

It doesn’t actually necessarily cost much. There are no penalties or things like that. They do have a small admin fee, but that’s less than £100.

We just mentioned the solicitor, which is another couple of hundred pounds. We also need a valuation and they’re going to charge a little bit too. It depends where you are in the country and who you use, but I would expect it to be £200 or £300.

So it’s not without its costs, but there’s no penalty if you pay it off early. It’s not like a mortgage where you have an early repayment charge. You can pay it off whenever you like.

The costs I’ve mentioned are upfront costs. We can add a little bit more borrowing onto the mortgage to reimburse you, but you can’t add them to the mortgage like you would do with an arrangement fee, for example. You will need that money available at the start.

How can a mortgage broker help?

This is quite a complicated process. There’s a few moving parts and it’s important to get the timing right. You could do it yourself if you wanted to – and if you do, here’s a tip: the valuation from your Help to Buy surveyor and the one for your new mortgage application don’t need to match.

That’s the number one hint for anyone repaying Help to Buy. Speak to your surveyor and let them know what you’re doing and ask them to value your property as low as they can. No one’s going to lie. We’re not encouraging any sort of fraudulent activity here. But when you get your Help to Buy valuation, your surveyor will use ‘comparables’ – similar properties that have sold within the last six months, ideally within half a mile.

The chances of them finding a recently sold property that meets all those requirements is quite slim, so they have to use similar properties – maybe the same amount of bedrooms but a different layout. We just need them to use the smaller example to give us a feasibly low figure.

With the mortgage lender, it’ll be a different surveyor and a different day. We can ask them to give a slightly higher figure. They will never be hundreds of thousands of pounds different, but if it’s £10,000 different that will help. It means you pay back £2,000 less on your Help to Buy Loan and helps your Loan to Value – the percentage of the property’s value that is mortgaged.

The higher the value of your property, the better your loan to value and the better rates you could get. So it’s a complex process. There’s different timings, different people to speak to and different forms to fill in. You’re much better off getting some professional help to do it. With this one particularly, get expert help on the process.

Think carefully before securing other debts against your home. 

You may have to pay an early repayment charge to your existing lender if you remortgage.

Your home may be repossessed if you do not keep up with your mortgage repayments.