Remortgage to pay off Help to Buy
- Access to over 100 lenders
- Access to exclusive deals not available on the high street
- Range of products to suit both personal and business needs
What's On This Page?
Get In Touch
Remortgage to pay off Help to Buy
Jess Pearson explains the process of remortgaging to pay off Help to Buy.
Can I pay off my Help to Buy loan by remortgaging? How does this work?
If you’re repaying your equity loan in full, you don’t need to get permission from Help to Buy. If you want to repay just part of your equity loan when you remortgage, you will first need to get permission to change your mortgage provider and increase the amount you’re borrowing on your existing mortgage.
To determine the amount outstanding on your Help to Buy equity loan, a valuation would need to be carried out by a RICS surveyor. The amount owed is based on the property value now, not when you originally purchased it.
Is it a good idea to remortgage to pay off debt? What are my remortgage options?
Remortgaging to pay off debt can lower your monthly payments and simplify your finances. However, it can result in higher overall interest costs, as you could be repaying the debt for longer. There’s also an increased risk to your home.
Remortgaging could involve upfront fees, so it’s crucial to compare this with other options. If this is something you did want to explore, different options could be remortgaging to a new lender, getting additional borrowing with your existing lender or even taking a second charge mortgage.
What happens with Help to Buy after five years?
After five years with a Help to Buy equity loan, you start paying interest. The initial interest rate is 1.75%, and it increases each year based on the Consumer Price Index plus an additional 2%.
You can also choose to repay all or part of the loan – either by taking out a new mortgage to cover the outstanding amount, or by using funds from other sources.
How do I release equity to pay off my Help to Buy debt?
To pay off your Help to Buy debt by releasing equity, you typically remortgage your property and use the new mortgage funds to repay the equity loan.
This requires a property valuation, a loan redemption form and a conveyancer to handle the legal aspects.
Can you pay off Help to Buy monthly? How much do you pay back on Help to Buy after five years?
Unfortunately, you can’t make monthly payments to repay the balance of the Help to Buy equity loan. The monthly payments taken from the five-year mark are interest-only payments.
You can repay all or part of your equity loan. Any part repayment must be at least 10% of the market value, and you can’t leave less than 5% of the market value amount to repay.
The total you need to repay is based on the property value, which is determined by a RICS surveyor at the point of enquiry.
Can you rent out a Help to Buy property after five years?
No, generally you cannot rent out a property purchased with Help to Buy equity loan, even after the five-year mark. The scheme was designed to help First Time Buyers purchase their primary residence, not for investment or Buy to Let purposes.
You must be living in your property as your main home to be eligible for the loan. To rent your property out, you’d need to repay the Help to Buy loan in full. After that, you’re not restricted.
Speak To an Expert
Can I still remortgage to pay off Help to Buy if I have bad credit?
Yes, it is possible to remortgage to pay off your Help to Buy loan, even with bad credit. But your options in terms of the remortgage may be more limited.
Is it worth remortgaging to pay off Help to Buy? What are the benefits and are there any risks involved?
In many cases, yes, especially if your Help to Buy a loan is approaching the five-year mark. That’s when the interest-free period ends and you’ll begin to pay interest on the equity loan.
Initially, this is at 1.75% of the loan amount, but will increase every April in line with the Consumer Price Index plus 2%.
This can mean higher monthly repayments, depending on the interest rates offered by lenders at the time. By remortgaging, you may be able to access lower interest deals and reduce your overall loan repayment costs.
Paying off the Help to Buy loan means you own more of your property outright and you can take full advantage of any future growth in market value.
How can a mortgage broker help here? Have you got anything else to add?
A mortgage broker can be there to guide you. It can be a complicated and confusing process where Help to Buy equity loans are involved. So utilise our knowledge to your advantage.
Just to note, the Help to Buy scheme has now ended and you can’t apply for a new Help to Buy equity loan. This only applies where you’ve got an existing one.
Your home/property may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.
The Financial Conduct Authority does not regulate some forms of Buy to Let Mortgage.
There may be a fee for mortgage advice. The precise amount of the fee will depend upon your circumstances but will range from £99 to £549, and this will be discussed and agreed with you at the earliest opportunity.
Asset Harbour Mortgage & Protection Ltd trading as Asset Harbour Mortgage & Protection are an appointed representative of HL Partnership Limited which is authorised and regulated by the Financial Conduct Authority.
