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Help to Buy Remortgage Advisors & Brokers in Milton Keynes
Understanding remortgaging with the Help to Buy Equity Loan Scheme
Remortgaging with Help to Buy
As with all mortgages, it is recommended that you review your mortgage product on a regular basis to ensure that you have the best mortgage product available to you. You can do this by remortgaging.
Remortgaging happens when you change the mortgage you currently have on your property, either by switching it to a new lender, or by moving to a different deal with your existing lender.
This is equally as important when you have a Help to Buy equity loan, although you may find your Help to Buy remortgage options to be a little more restricted.
6 years into the scheme, more and more people are either approaching the end of their initial mortgage term, or coming up to the 5 year anniversary to start making interest payments on the loan. This means that these people are now faced with the prospect of higher monthly outgoings unless they take action.
Remortgaging with Help to Buy could allow you the opportunity to not only enjoy the best market rates, but also to consider borrowing additional funds to repay some of all of your equity loan. We at Mortgage Light can help and guide you through this process.
About the Help to Buy Equity Loan Scheme
The Help to Buy Equity Loan Scheme was launched by the government in 2013 and has since gone through a number of changes. In 2021, the scheme became exclusive to first-time buyers only, and now enforces regional price limits.
This means that buyers can only use the scheme to purchase a home costing no more than the specified property price cap in their region. This is to ensure that the scheme reaches the people who need it most.
The regional price caps are as follows:
Regional price caps:
- North East - £186,100
- North West - £224,400
- Yorkshire and the Humber - £228,100
- East Midlands - £261,900
- West Midlands - £255,600
- East of England - £407,400
- London - £600,000
- South East - £437,600
- South West - £349,000
In order to be eligible for the Help to Buy Equity Loan Scheme, you must tick the following boxes:
- You must be a first-time buyer
- You must be purchasing a new build from a registered Help to Buy builder
- You must be purchasing a new build costing no more than your regional price cap
- The new build must be the only property you own and your main residence
To use the scheme, you must put down a minimum 5% cash deposit on a new build property. As part of the scheme, you are then eligible for an equity loan (provided by Homes England) of up to 20% to make up the rest of your deposit. In London, this figure is 40% due to the higher house prices. The remaining 75% (or 55% in London) of your property purchase is funded by a personal mortgage.
Paying back the Help to Buy equity loan
You can pay off the equity loan at any point, paying either 50% or 100% of the outstanding equity loan sum, however when doing this it will usually incur a fee. In London where the Help to Buy loan is up to 40% of the purchase price, you are able to pay off 10% increments of the equity loan.
The government requires the loan to be paid off in a cash lump sum. This could be money gifted to you, inheritance, savings, a bonus or through remortgaging. A Help to Buy remortgage is the most common way to pay off the loan for most people, however the process is not as straightforward as with a general remortgage. Even finding the right lender can be more difficult, as not all lenders will accept remortgage applications to pay off the Help to Buy loan and those that do, have additional restrictions regarding the amount of equity that is in the property.
This is where we can help. As specialists in Help to Buy mortgages and Help to Buy remortgages, we have access to the whole of the market and can hand hold you through every step of the process.
Your remortgaging options
Essentially, you have three options available to you to consider:
- Option one
Transfer your existing mortgage to a new product and/or lender and keep your full equity loan. Not all mortgage lenders will fund alongside the equity loan scheme and so you may find yourself a little restricted.
- Option two
Arrange a remortgage for a higher amount to repay your existing mortgage and all of the equity loan, thus giving you full ownership of your property. This is the most common way to pay off the equity loan.
- Option three
Arrange a remortgage for a higher amount in order to repay your existing mortgage and partially repay your equity loan. Again, the mortgage market for this option is limited, so you may struggle to get the deal you want.
- Set a time to speak to Mortgage Light Remortgage Team
- Mortgage Light will do all the do relevant checks to ensure the Remortgage is affordable, and then upon receipt of relevant documentation from yourselves we will be able to provide you with an AIP/DIP
- Instruct a RICS Valuation, you will need to pay for this upfront – don’t worry Mortgage Light can advise you how to do this.
- Mortgage Light will submit your application to the lender
- Appoint solicitor – Mortgage Light can help by providing you with details of specialist solicitors who deal with Help to Buy Remortgage.
- Valuation will be instructed by the lender
- Contact Help to Buy to advise them that you wish to repay the equity loan, they will then send a upto date loan settlement figure to the solicitor. Again Mortgage Light can advise you how to do this.
- The documentation that the lender requested will be assessed
- The mortgage offer will be issued and a copy sent to yourselves and your solicitor
- Set a time to meet or speak to Mortgage Light to review your mortgage offer and discuss your protection needs.