Remortgage to Pay Off Help to Buy

How to Easily Repay Your Help to Buy Loan by Remortgaging​​

​

1. Understanding the Help to Buy Equity Loan

2. Why Remortgaging Is a Popular Choice for Repayment

3. When Is the Right Time to Remortgage?

4. Steps to Remortgaging for Help to Buy Loan Repayment

5. Common Challenges and How to Overcome Them

6. Hidden Costs to Watch Out For

7. Why Use a Mortgage Broker for Your Remortgage?

8. Next Steps: How We Can Help You Remortgage Successfully

​

1. Understanding the Help to Buy Equity Loan

The Help to Buy Equity Loan is a government-backed initiative that helped you purchase a home with only a 5% deposit. Under this scheme, you could borrow a percentage of the property purchase price from the government, up to 20% outside London or 40% in London, giving you a smaller mortgage from a traditional lender.

 

The loan is interest-free for the first five years, but it’s important to remember that it’s not a grant. After the interest-free period ends, the loan begins to accrue interest, and you’ll eventually have to repay the government’s share, usually within 25 years or when you sell the property (whichever comes first).

​

If your home’s value has risen, the total amount you owe the government also increases, as it’s a percentage of your property’s current market value. If it has fallen, you technically owe less - but that may lead to its own challenges if you need a larger mortgage to cover both the remaining balance on your existing mortgage and the Help to Buy loan.

​

Paying back the Help to Buy loan can be done either by selling your home and settling the loan from the proceeds or by repaying it (in part or in full) via other means. Many homeowners choose to repay the equity loan through a remortgage, which is the focus of this guide.

​

2. Why Remortgaging Is a Popular Choice for Repayment

Remortgaging to repay your Help to Buy loan means arranging a new mortgage deal or increasing your existing one to cover the outstanding equity loan. In doing so, you no longer owe the government a share in your home. Several reasons make remortgaging an appealing route:

​

• Avoid the rising costs: After five years of no interest, the Help to Buy loan’s interest rate starts at 1.75% and rises each year, so you can avoid ever-increasing fees by repaying the loan sooner rather than later.

• Access potential better mortgage rates: If you’ve built up equity in your property, your loan-to-value (LTV) could be lower than when you first bought the home, which often means you can access more favourable mortgage deals.

• Retain your home: Unlike selling, you don’t have to move. You simply switch or increase your mortgage while staying put.

• Full ownership: Once you clear the equity loan, the government no longer has a stake in your property, and you’re free from the scheme’s rules or restrictions.

​

Remortgaging is not without complexities, but many homeowners find that the timing naturally coincides with the end of their initial mortgage rate deal or just before the equity loan’s interest charges kick in.

​

3. When Is the Right Time to Remortgage?

Your personal circumstances and broader market conditions play a large part in deciding when to remortgage:

​

• End of the interest-free period: Many homeowners look to remortgage around the five-year mark, avoiding the initial 1.75% interest charge that would otherwise begin after year five.

• Mortgage deal expiry: If your fixed-rate or other introductory mortgage deal is ending, it can be more cost-effective to organise both switching (or increasing) your mortgage and repaying the equity loan at the same time. You can sidestep any early repayment charges on your current deal and synchronise everything smoothly.

• Favourable market rates: Remortgaging when mortgage rates are relatively low can be beneficial, particularly if the Help to Buy loan’s interest is set to rise or if you want to lock in a fixed rate for your monthly payments.

• Improved personal finances: A better credit score or a higher salary than when you first bought might help you secure a larger or more affordable mortgage. Conversely, if your finances aren’t as strong, you might need to improve them before remortgaging to ensure you’ll be approved for the bigger mortgage needed to repay Help to Buy.

​

You’ll also want to consider your property’s current market value. A higher valuation could mean you owe more in monetary terms on the equity loan but might qualify you for a better mortgage rate (because of the lower LTV). A drop in value, on the other hand, can create negative equity concerns, so it’s important to get an accurate valuation and plan your next steps carefully.

​

4. Steps to Remortgaging for Help to Buy Loan Repayment

Even though remortgaging with an equity loan repayment involves extra steps, you can break it down into a manageable sequence:

1. Obtain a property valuation: You’ll need to get an independent valuation by a surveyor approved by the Royal Institution of Chartered Surveyors (RICS). This is to determine how much you owe to Help to Buy, as the loan repayment is based on a percentage of your property’s current market value.

2. Request a redemption statement: You or your solicitor will provide the valuation report to your local Help to Buy agent, along with the required forms and an admin fee, to obtain a formal redemption figure for the loan.

3. Mortgage application: Next, you’ll apply for a new mortgage (or a further advance on your existing one) to cover your remaining mortgage balance plus the redemption amount. The lender will conduct its usual checks on affordability, credit history, and property value.

4. Legal and completion process: Once you accept a new mortgage offer, your solicitor will coordinate the repayment of the equity loan using the released funds. After completion, the government’s charge is removed from your property’s title, leaving your new mortgage as the sole charge.

​

It’s essential to factor in timing. Your RICS valuation and the Help to Buy redemption figure are typically valid for only a few months, so you’ll want to ensure your mortgage application completes within that window. Staying organised and communicating with all parties (lender, surveyor, Help to Buy agent, and solicitor) is key to smoothing out the process.

​

5. Common Challenges and How to Overcome Them

Remortgaging to repay your Help to Buy loan can come with hurdles. Here are some of the most common issues:

• Valuation discrepancies: The surveyor’s valuation could come in higher or lower than anticipated. A higher valuation increases the amount you owe on the equity loan, whereas a lower valuation might make it harder to borrow enough to repay both your current mortgage and the equity loan. If you feel the valuation is inaccurate, you can challenge it, though it must be a credible basis.

• Affordability: When you remortgage, you’re seeking a higher mortgage balance to include the equity loan. Lenders will reassess your income and outgoings, which might affect whether you can borrow as much as you’d like. Improving your credit score and reducing other debts can help your affordability profile.

• Negative equity: If your home’s value has dropped significantly, you could find yourself in a situation where your property is worth less than the total owed (mortgage plus equity loan). You may need to postpone repayment, make a partial repayment, or explore specialist lending if available.

• Timing problems: Overlaps between the Help to Buy redemption letter’s validity, the need for an up-to-date valuation, and your new mortgage approval can cause logistical snags. Starting the process well in advance of your deadlines helps mitigate these issues.

​

A mortgage broker can be an invaluable asset in navigating all these potential challenges, offering advice on lenders’ criteria and proposing alternative paths if you hit roadblocks.

​

6. Hidden Costs to Watch Out For

Remortgaging always comes with fees, but repaying a Help to Buy equity loan adds extra considerations:

​

• Valuation costs: You must obtain a formal RICS valuation specifically addressing your Help to Buy redemption, which can cost a few hundred pounds.

• Help to Buy administration fee: You’ll pay an admin fee (often around £200) to the Help to Buy agent for handling your redemption.

• Mortgage fees: Some mortgage deals include product or arrangement fees. You’ll need to check if these can be added to the loan or if you have to pay upfront.

• Legal and conveyancing fees: While remortgage conveyancing can sometimes be free with specific mortgage packages, not all deals include the additional legal work required for Help to Buy redemption. You may need to pay your own conveyancer to settle the equity loan and remove it from the property’s title.

• Early repayment charges: If you’re still within a fixed or discounted period on your existing mortgage, check for any early repayment charges before switching or taking out a bigger loan.

• Ongoing interest: If you’re beyond the five-year interest-free period, you will continue to pay interest on the Help to Buy loan until it’s fully settled, so factor that cost into your overall budgeting.

​

Preparing for these fees in advance will help you avoid surprises and keep your remortgage process running smoothly.

​

7. Why Use a Mortgage Broker for Your Remortgage?

It might be tempting to go straight to a lender or rely on high-street options for remortgaging, but a mortgage broker provides substantial advantages:

​

• Expertise with Help to Buy cases: You benefit from guidance on the valuation, redemption process, and the specific steps needed to clear your equity loan. Brokers know which lenders are open to Help to Buy remortgages and understand how to package your application effectively.

• Access to a wider market: Brokers have access to mortgage deals across a large pool of lenders, including specialist ones that might not be available to you directly. This can mean a better chance of finding a competitive rate and a suitable lender.

• Time-saving and reduced stress: Instead of dealing with multiple parties, forms, and fees on your own, you can let a broker handle much of the administration. From liaising with your solicitor to coordinating with the Help to Buy agent, a broker ensures everything stays on track.

​

8. Next Steps: How We Can Help You Remortgage Successfully

If you’re ready to explore remortgaging and clearing your Help to Buy equity loan, the best starting point is speaking with a mortgage broker. By having an expert evaluate your finances, property value, and future goals, you’ll gain clarity on the best approach to take.

​

We can guide you in timing your new application so it aligns with your existing mortgage deal’s expiry, the Help to Buy redemption window, and any other personal milestones. We’ll take the time to explain each stage, from instructing the RICS valuation to coordinating with solicitors and finalising the remortgage completion. You’ll also receive tailored advice on managing potential affordability constraints, choosing between fixed or variable mortgage rates, and reducing your overall costs.

​

Through our experience, we know the ropes when it comes to Help to Buy remortgages. By delegating the task to us, you get to focus on your daily life, secure in the knowledge that professionals are handling the process efficiently. If any obstacles emerge, we’ll identify solutions, liaising directly with lenders and Help to Buy agents so that you don’t have to chase multiple parties on your own.

​

Ultimately, your home is likely your most valuable asset, and the decisions you make about your mortgage can have a long-term impact on your finances. Remortgaging to repay your Help to Buy equity loan is often a wise step towards full homeownership. By choosing to work with a qualified mortgage broker, you’re doing your due diligence—ensuring that you get the right advice, the right product, and that the process completes as smoothly as possible.

​

If you’re considering taking action or simply want to learn more, get in touch. A short, no-obligation conversation can help you gauge your readiness to remortgage and paint a clearer picture of the steps ahead. Free yourself from ongoing equity loan interest, invest in your future, and make the most of your home.

​

Remember: while remortgaging and repaying your Help to Buy loan involves upfront effort, the potential benefits—long-term savings, full control of your property, and streamlined finances - are well worth it. Get started today by speaking with a professional who can guide you every step of the way.