If you’ve got Help to Buy in place at your existing property, we’ve got the experience to help you understand the process of paying it off..
The help to buy scheme closed to new applications on 31st of October 2022 but since the scheme opened in March 2013 hundreds of thousands of homes were purchased using it
If you are, you’ll have received a 20% contribution towards your deposit when you first purchased your property, and in return, when you come to sell the property or whenever you come to pay of the Help to Buy Equity Loan, you’ll be required to pay the government back 20% of the CURRENT value of your property.
A common mistake that people make is thinking you only pay back what you initially borrowed. That is NOT the case. You benefit from the uplift in the property’s value (if the value has increased), but so do the Government. And if the value of your property decreases, so does what you owe the Government.
If you purchased your Help to Buy property for £200,000, you would have received £40,000 from the government towards your deposit.
If your property is now worth £220,000, you’ll owe the Government 20% of that figure which is equal to £44,000 because your repayment is based on the CURRENT value.
There are 3 main options for paying off your Help to Buy Equity Loan:
Let’s start with remortgaging: you have the option to remortgage to raise the money to pay off the Help to Buy Equity Loan, subject to meeting the required affordability.
The first step to deciding what you’ll do is to SPEAK TO US. We can help you see if remortgaging to pay off Help to Buy is affordable & we can chat about your personal circumstances & help you assess your options.
Once you’ve spoken to us, if remortgaging is the right option, you’ll need to get an Independent RICS Surveyor to provide you with a Help to Buy Valuation so you can submit it to Target who administer the Help to Buy Scheme. We can recommend a trusted surveyor who can help… just ask!
That report is valid for 3 months from the date of valuation. It must be sent to Target within 5 working days of it being issued. If you take longer than 3 months to complete, you may be required to get a desktop valuation done on the property to ensure it is still up to date & accurate. This extends the validity of the valuation report for another 3 months.
The remortgage will also require a Mortgage Valuation conducted by the lender & both the RICS valuation & the mortgage lenders valuation need to be aligned.
Once the valuations come back, we wait for your mortgage offer & then it’s over to your conveyancing solicitor to do the legal leg work.
Before you complete, you’ll have to pay a £200 administration fee to Target to repay the loan & you’ll need to complete the Help to Buy Loan repayment application form.
Once this is done, you’ll receive your redemption letter & your solicitor will work with you to get everything over the line. The solicitor will pay the money owed directly to the scheme.
And when you complete…. Voila! If you’ve paid off 100% of Your Help to Buy Equity Loan, then it is now fully repaid. Your solicitor will send you a completion statement on headed paper & the charge against your property will be removed at Land Registry.
Seem scary? Don’t worry… we have experience helping people just like you complete this task. We’ll be with you every step of the way, letting you know what needs to be done & when.
The same process as remortgaging largely applies (see above). The main difference being, a mortgage valuation is not needed on your existing property because you will no longer have a mortgage on it when you sell.
To understand your options for your new home purchase, it’s important you speak to an advisor. We can help you through the process of understanding how much equity you’ll have from the sale, after paying off your Help to Buy Equity Loan. This is helpful so you can budget how much deposit you plan to put down on your next home, & how much money you might want to keep for yourself. Starting with a plan!
You then start your dream home search… & once it’s found, we work to secure you the perfect mortgage for your new home, while supporting you along the way to paying off your existing Help to Buy Equity Loan.
We recommend you only instruct a RICS certified Surveyor to do your Help to Buy Valuation after you have received & accepted a formal offer on your property.
Once you sell your home & complete all of the necessary steps, your solicitor repays the help to buy equity loan using the funds made from your sale.
Generally, your sale & new purchase would complete at the same time.
Again, the same process detailed in the remortgage section above largely applies. However, you won’t need a new mortgage valuation as you are not remortgaging the property, though you will still need an Independent RICS Surveyors Help to Buy Valuation report so you know how much you owe.
You’ll need to confirm where the funds are coming from (like savings or inheritance) & be able to suitably evidence that with your solicitor.
You can make partial or full repayments & the amount simply needs to be confirmed with your solicitor.
If you pay off 100% of the Equity Loan, the charge is removed at Land Registry & you can now do with the property exactly what you please.
The short answer is, it’ill cost you.
The Government will start to charge you interest on the Help to Buy Equity Loan. You DO NOT get charged any interest for the first 5 years, but after that you’ll be charged interest which rises the longer you keep the Equity Loan in place. This doesn’t go towards paying off what you owe, it’s simply paying the interest the Government are charging you for the Loan.
Remember, the Help to Buy Equity Loan has to be repaid within 25 years of the original date you took it out.
This can be done, but it’s quite tricky. A very small number of lenders will allow you to remortgage to them with the Help to Buy Loan in place. The more popular choice if you’re keeping your Help to Buy Loan in place is to do a Product Transfer with your existing lender. However, if your circumstances dictate this is not the best option for you, we can help you move your Help to Buy Mortgage elsewhere & walk you through the process.
Your home may be repossessed if you do not keep up repayments on your mortgage
"Fantastic service from Dec throughout the process. He made the process very easy and understandable and was always available to help and support in whatever way he could. I would very highly recommend Dec" George, 31/08/2022
Get in touch today.
Whether you’re just getting started and want to learn more, already found your dream home to move to, or you’re remortgaging your current home, we’d love to help!
Plura is a trading style of Plura Mortgage Advice Ltd which is an Appointed Representative of PRIMIS Mortgage Network which is a trading name of First Complete Limited. First Complete Limited is authorised and regulated by the Financial Conduct Authority. Registered Office 25-29 Sandy Way. Yeadon, Leeds, LS19 7EW. Registered in England & Wales with company number 14931418. We charge a fee for Mortgage Advice, usually £395, but this can vary depending on the service you are receiving. We’re also paid commission from the lender
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
The guidance and/or advice contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK