For the lay man or woman securing a Help to Buy Remortgage can be a daunting task. The problems that many homeowners now face are too little equity giving a poor loan to value (ltv) or being unable to find a suitable lender.
When the Help to Buy scheme was first introduced back in 2013 it was perceived as being the answer to all First Time Buyer problems. A minimal deposit of say 5% from the purchaser was then bolstered with a 20% interest free loan from the Government for the first 5 years of the mortgage term. Many Help to Buy mortgages were taken over a 5-year fixed rate term, which coinciding with the term of the Governments Interest Free loan element, has now put many people into a somewhat invidious situation being faced with a mortgage on the lenders Standard Variable Rate plus having to start paying interest on an element of their mortgage that was previously interest free. It is easy to see why many are panicking, but all is not lost!
Before you make any decision about how you wish to restructure your mortgage, you do need to consider the following:
Obtain an independent valuation of your property from an RICS accredited Surveyor. This is essential as it will be a requisite when obtaining a redemption figure from the Help to Buy team for the area your property is in.
Speak with your current lender to obtain an accurate redemption figure on your existing Mortgage.
These two pieces of information will give you your new loan to value which is an essential element when ascertaining what you can and cannot achieve.
Assuming over the 5-year period that many Help to Buy mortgages were arranged your property has increased in value and that you have made all of your mortgage repayments on time, then you should have dramatically more equity in your property than you had at the outset.
To allow you to break from the Help to Buy mortgage regime and to have a normal mortgage you will need to Remortgage to consolidate the equity loan from the government. This will leave you initially with a new loan to value, probably in the region of 90 – 95% but you will now be able to seek out deals from across the whole market and not just from the lenders who offer Help to Buy options.
The main object of the exercise is to establish yourself into a better and stronger financial position by obtaining a more favourable rate and putting together a plan to ensure that your mortgage will be repaid in the shortest time possible at the least cost to yourself.
Even if you have unusual circumstances such as adverse credit or Self Employed, having access to the whole mortgage market will allow Abode Mortgages Limited the opportunity to find a deal that will work for you.
You may have to pay an early repayment charge to your existing lender if you re-mortgage
Your home may be repossessed if you do not keep up repayments on your mortgage.