Mortgage guide: How to remortgage and pay off your Help to Buy loan
How to remortgage your Help to Buy home
If you bought a property using the government’s Help to Buy scheme and your fixed or tracker rate is about to expire, it is possible to remortgage.
Trinity Financial’s brokers have been helping more borrowers refinance and pay off the Help to Buy property mortgage, enabling them to consolidate the debt.
Many younger borrowers used the Help to Buy property scheme because it was so generous. They have now hit the five-year mark and have started paying interest on the loan, making it a good time to look at alternative options. There is also the potential 'benefit' that the price of flats has reduced in many areas, making it a reasonable time to get a Help to Buy property valuation.
Will banks and building societies allow Help to Buy remortgages?
Most banks and building societies allow Help to Buy Equity Loan remortgages, provided applicants have sufficient income to qualify for the mortgage loan size they need and a good credit history. They often issue like-for-like remortgages, meaning borrowing additional funds above the mortgage and loan is tricky.
Barclays for Intermediaries, for example, allows like-for-like re-mortgages, accepting applications up to a maximum of 75% of the property's current market value. Where additional borrowing is requested to repay all or part of the equity loan or for other purposes, the bank will accept applications up to a maximum of 85% of the property's current market value, including the additional borrowing.
Aaron Strutt, product director at Trinity Financial, says: “The gov.uk website states that remortgaging a Help to Buy property is only accepted for a limited number of reasons including to pay back all or part of your equity loan, to make structural alterations when you have permission or to fund a transfer of equity. A transfer of equity is where you can change from joint to sole (or sole to joint) property ownership. It adds you can either remortgage with your existing lender or change to a new one.”
Remortgage your Help to Buy mortgage using higher income multiples
As many lenders class a Help to Buy remortgage as a standard mortgage application, it is normally possible to borrow around four to five times single or joint incomes.
If you have professional qualifications and work as a doctor, dentist, or lawyer, for example, you may be able to borrow up to 5.5 times your salary. Also, those earning over £75,000 or £100,000 combined can access income stretch mortgages if they apply for a Help to Buy remortgage.
What you’ll need before you apply for permission to remortgage your Help to Buy loan
Contact your mortgage lender for a redemption (or repayment) statement. This confirms the total amount you need to repay and that the total on your repayment mortgage has not increased.
When Help to Buy receives the statement as part of the application process, it must be less than 12 working days old.
Do you need to pay back the equity loan to remortgage?
No, it’s not essential. However, depending on your circumstances, it might be worth looking at. That’s because many lenders won’t consider lending to you if it will remain.
Is it possible to do a Joint Borrower Sole Proprietor Help to Buy remortgage?
Yes, it may be possible. Joint Borrower Sole Proprietor mortgages are often used by parents who want to help their adult children onto the property ladder. They may also want to help them use their income for their children to remortgage.
Call Trinity Financial on 020 7016 0790 to secure a remortgage, book a consultation, or complete our mortgage questionnaire.
The information contained within was correct at the time of publication but is subject to change.
Your mortgage is secured on your property. Your property may be repossessed if you do not keep up repayments on your mortgage
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