The Help to Buy scheme has been a lifeline for many first-time buyers and those struggling to get on the property ladder. But what happens if you want to remortgage a property purchased through Help to Buy? This comprehensive guide will guide you through every step of how to remortgage, from learning about basic remortgaging practices to specific steps involved with refinancing your Help to Buy property.
Understanding Help to Buy Remortgaging
Understanding Help to Buy Remortgaging
When you remortgage help to buy, the process consists of changing your current mortgage deal on a property purchased using the Help to Buy equity loan scheme. This could be with your existing mortgage lender or a new lender. The reasons for remortgaging can vary, from seeking a better mortgage deal to repaying the equity loan or even reducing the mortgage term.
Why Consider Help to Buy Remortgaging?
Remortgaging your Help to Buy property may provide numerous advantages:
- Refinancing may enable you to secure a better interest rate.
- Potential for lower monthly repayments.
- Switching from interest-only to repayment mortgages.
- Opportunity to repay part or remortgage to pay off all of your Help to Buy equity loan balance.
Successful Remortgage Help To Buy Story
All of this was achieved at no cost to our customers, thanks to the free services of YesCanDo Money. Their testimonial stated, "We couldn't have navigated this complex process without YesCanDo Money. They saved us time, money, and a lot of stress."
The Genesis and Evolution of Help to Buy
The Help to Buy scheme was introduced as a government scheme to support first-time homeowners. Its evolution and impact over the years have been significant, reshaping the homeownership landscape for many.
The Mortgage Guarantee Impact
Help to Buy mortgage guarantees may impact the remortgaging process. If you possess one, it’s wise to consult with experienced mortgage brokers regarding its implications and explore various remortgage options.
Decoding the Help to Buy Equity Loan
The Help to Buy equity loan is a government loan that forms part of your deposit when you buy a new-build home. It’s interest-free for the first five years, but from the sixth year onwards, you start paying interest, which can be influenced by the retail price index.
Interest Rates and Their Implications
From the sixth year, homeowners face interest rates starting at 1.75%. This makes remortgaging an appealing option, especially when considering the potential for higher monthly repayments.
Staircasing Your Help to Buy Loan
Staircasing is a process where you gradually buy more shares in your home. With staircasing, you can:
- Partially pay off the loan.
- Reduce the outstanding size of the equity loan over time.
- Move closer to full ownership of your property.
The Process and Benefits of Staircasing
For homeowners looking to climb the property ladder and reduce their equity loan balance, staircasing presents a viable option. It offers a pathway to full ownership, allowing homeowners to buy out the government’s share in stages over time.
Understanding the Loan-to-Value (LTV) Ratio
The loan-to-value (LTV) ratio represents the ratio of the loan amount to the property’s market value. Using your LTV ratio accurately can enable informed remortgage decisions.
Impact of LTV on Remortgaging Decisions
A clear understanding of the LTV ratio is crucial when considering remortgaging options, especially within the Help to Buy scheme.
Collaborating with Right Mortgage Lenders
The world of remortgaging is vast, and finding the right mortgage lenders can make all the difference. Factors to consider when choosing a lender include:
- Competitive interest rates.
- Flexible terms.
- Understanding of the intricacies of the Help to Buy scheme.
The Role of a Mortgage Broker
A seasoned mortgage broker can be an invaluable ally in the remortgaging journey. Their industry insights and connections can pave the way for a smoother process and better deals.
Completing the Remortgage Process
Once your new mortgage is approved, the next step is the completion phase. This involves a series of crucial steps to ensure a smooth transition from your old mortgage deal to the new one.
Legal Formalities and Paperwork
After your new mortgage gets the green light, you’ll be required to finalise the legal paperwork. This step ensures the mortgage is transferred seamlessly from your existing lender to the new lender. If you’re on the path to repaying your equity loan, the repayment process with the Help to Buy scheme administrator also needs completion.
Securing Consent from Homes England
Remortgaging a Help to Buy property isn’t just about liaising with lenders. You’ll also need to get the nod from Homes England. Why? The government’s equity loan on your property means any mortgage changes will influence their stake. To get this consent, you’ll need to furnish specific documents, including a redemption statement from your mortgage provider and a surveyor’s valuation report.
The Importance of a Surveyor’s Valuation Report
When remortgaging your Help to Buy property, a surveyor’s valuation report is non-negotiable. This report, crafted by a Royal Institution of Chartered Surveyors (RICS) certified surveyor, pinpoints the current market value of your home. This valuation is pivotal for your lender to determine the equity loan payment you owe.
How YesCanDo Money Can Help
YesCanDo Money is an expert remortgage broker that offers a comprehensive and free service to all customers. Their team of remortgage advisors can handle everything for you, including the application, paperwork, and liaising with the mortgage lender and solicitor.
If you’re thinking about refinancing your Help to Buy home, yesCanDo Money offers tailored Help to Buy Remortgage Experts who can offer personalised advice based on your unique circumstances and help guide the remortgaging process from start to finish.
Remortgaging within the Help to Buy scheme might seem like a daunting task, but with the right knowledge and guidance, it can be a smooth and beneficial process. Whether you’re looking to capitalise on better mortgage deals, repay your equity loan, or simply gain a better understanding of your financial position, this guide aims to navigate this journey with confidence, ensuring your financial decisions align with your current needs and future aspirations.
Frequently Asked Questions
Can I remortgage on a Help to Buy scheme?
You sure can. Remortgaging lets you get a new mortgage deal on a home bought through Help to Buy. You can do this with your current lender or find a new one. It's a way to get better rates, change terms, or repay the equity loan.
Should I pay off Help to Buy mortgage?
Paying the Help to Buy equity loan can make sense. It's interest-free for 5 years, then interest kicks in. Repaying the loan avoids that interest and can reduce overall borrowing costs.
What if I can't afford to remortgage?
If remortgaging is unaffordable, talk to your lender about options or get financial advice. They may offer different products or terms. Government schemes or debt charities can also provide guidance on managing finances and mortgage arrears.
Can you transfer Help to Buy mortgage?
You can't directly transfer a Help to Buy mortgage to another property. But you can sell, repay the equity loan, and use the proceeds for a new mortgage on another property.
Can I take equity out of my Help to Buy house?
To access equity, you'll typically need to repay the Help to Buy loan first. Then you can remortgage to release equity, if allowed by your lender and property value. However, you can release equity to pay off the help to buy loan.
Do you need a solicitor for Help to Buy remortgage?
Yes, a solicitor handles the legal aspects of remortgaging a Help to Buy property. This includes transferring the mortgage and liaising with the Help to Buy administrator.
Can you extend your house with Help to Buy?
If you have a Help to Buy equity loan, get permission from the agent before major changes like extensions. Ensure any alterations don't violate the equity loan agreement terms.