Remortgaging Your Help to Buy Home
So you bought your home with Help to Buy and now the nice mortgage rate you had is running out and you need to find a new one, but how exactly do you do that?
Well as you already know, the Help to Buy scheme isn’t your usual mortgage loan, it brings a fair amount of additional factors to consider during the mortgage process and it’s important you understand them at the outset in order to prevent any issues down the line.
When it comes to remortgaging on the Help to Buy scheme, people’s main fears seem to be that it’s going to be time consuming, complicated, and costly. Whilst we believe this shouldn’t be the case, we understand there can be a number of things to consider, so we put together this list to ensure you make the right preparations to remortgage your Help to Buy home.
Why should I remortgage on Help to Buy?
The first thing you need to think about is why you are considering a remortgage, why it’s important and what the consequences of doing nothing are.
Well when your initial interest rate runs out you will revert to paying your chosen lenders Standard Variable Rate; this is their default interest rate and can be a considerable amount higher than the best rates on the market.
Right now there are some great products and rates available to borrowers; they come with a range of benefits like cash back and free valuations and some without any up front arrangement fees.
Whatever your situation is, it’s always a good idea to consider all of your options before making a final decision; if you don’t shop around, it could prove to be very expensive for you.
Should I pay off my Help to Buy equity loan?
As you know, the Help to Buy equity loan scheme means that you are a shared owner of the property you are living in, so when you’re thinking about a remortgage you should consider if this is the right time to buy back all or part of the Help to Buy share of your property, leaving you as the sole owner.
Can you afford to pay back the equity loan? How would becoming the sole owner of your home affect your plans for the future? Have you considered the cost of the equity loan once you finish your interest free period?
When do I have to start paying interest on the Help to Buy loan?
After 5 years of owning your Help to Buy property, you are going to have to begin paying interest on the Help to Buy portion of it, this is going to increase your monthly costs so be sure to check when the interest rate payments will begin and how much they are going to be. Consider whether or not you’re going to be able to afford your new payments and whether or not you should think about paying off the equity loan early.
If you sell the property you will be required to pay back the Help to Buy scheme’s equity loan in full.
How long will a remortgage take?
If you are going to remortgage then you should give yourself plenty of time, particularly if you are changing lenders, when you do this, the Help to Buy scheme will need to provide the new lender with a deed of postponement, these are currently taking 3 months to organise and cost £115.
We recommend contacting your Mortgage Advisor at least 4 months before the mortgage scheme ends.
We offer you an obligation and fee free consultation to go through all the options and find the best method and product for your remortgage, if you think you’re ready to look at your options - give us a call today on 01823 286271 or book an appointment on our website.