Our latest information towards Repaying Help To Buy in 2023.
You bought a new house a few years ago, got yourself a mortgage and made your way onto the property ladder using Help To Buy to make it happen. But fast forward some years later and now your house is worth more than you bought it for and it’s time to repay the Help To Buy loan. So where do you start?
The first very important thing you need to know is that if you took out Help To Buy, you would have borrowed 20% (or up to 40% in London) of the property’s value so you must also repay the same percentage of the property’s value back. Many people either don’t realise this or have forgotten about it. Now this is crucial because in most cases the value of the property will have increased so the amount you need to repay will be more than what you borrowed initially.
To ensure your Help To Buy costs you as little as possible, there is a specific process you will need an expert mortgage broker to guide you through.
If you took out Help To Buy, I very much hope you had excellent mortgage advice from the very start so that you discussed how you would look to repay it before you took it out! A good mortgage broker will have gone through your options for repaying it before or around the time you begin to pay interest on the total amount, which happens after 5 years.
Within those 5 years, you will have been repaying your mortgage but no interest or any of the balance of the Help to Buy loan. When those 5 years are up you will begin paying interest-only on the Help To Buy loan not any of the total balance. Usually within those 5 years, your salary may have increased, the value of the property may have increased, and your mortgage decreased slightly.
If this is the case, then you may be able to remortgage to repay the whole amount of the Help To Buy loan. This could perhaps be over a slightly longer term to help with monthly repayments and leave you with a single mortgage for the property. Usually, the easiest way to achieve this is by remortgaging to a new lender at this point. This is where an expert mortgage broker becomes your best friend! Looking at new available lenders, sourcing the best product and taking care of all the applications and valuations you’ll need.
Sometimes however, this process is not quite this straightforward. If your salary has not increased or perhaps one person is now not working or working as much or if the value of your house hasn’t increased that significantly, other options will need to be explored to help keeps costs to a minimum. Some lenders now allow people to repay part of their Help To Buy loans which is a great option if repaying the full amount is not an option. Paying off part is better than paying interest on the whole amount.
However you decide to repay your Help To Buy loan timing is key. Ideally you want to repay it in full before the interest begins after 5 years. If this is not possible, you should still aim to repay it as quickly as you feasibly can because remember, as your property price increases so does the amount you owe on your Help To Buy loan!
It’s never too early to begin planning how you will repay your Help To Buy loan, as I’ve previously mentioned, you should have had this discussion before applying for it. Wherever you’re up to in this process, get in touch with one of our expert brokers who can look at your individual situation and come up with a plan. Call us on 01295 981300 or drop us an email at hello@vantage-mortgages.co.uk and we’ll be ready to guide you through.
Want even more info of repaying Help To Buy? Why not take a look at my YouTube video packed with even more tips to save you money in the long run?
