Five years have passed since the government launched its Help to Buy: Equity Loan, which helped borrowers to purchase a new-build home by offering a loan worth 20% of the property’s value, interest free for the first five years. This means borrowers who took out these loans at the start of the scheme in 2013 will now be charged interest on the loan portion, in addition to their existing mortgage on the remaining sum.
What options are available?
Help to Buyers can remain on the scheme, paying the interest on their loan alongside their mortgage. Or, they can look to remortgage to a standard mortgage product, in doing so, acquire 100% of their property’s equity.
Put simply, this means borrowers taking out a new mortgage which replaces their existing mortgage PLUS repays the government’s 20% stake in their home. In this case, they own 100% of the equity of their home and then simply make one monthly mortgage repayment.
Who offers remortgages for post-Help to Buyers?
When looking for a mortgage lender one area to investigate is whether the lender considers the repayment of an equity loan to be debt consolidation. Many lenders will not lend on debt consolidation, or will limit the Loan to Value (LTV) which they will lend – meaning, you may not be able to access all of the funds you need for your remortgage.
At Ipswich Building Society we do not consider the repayment of the government’s equity loan to be debt consolidation, and so are able to lend up to 95% LTV to Help to Buyers wishing to move away from their scheme.
We don’t treat post-Help to Buy applicants seeking a residential loan any different from other applicants who are remortgaging, which means there are no separate products - or pricing structures - and applicants can access our main range of mortgage products. We do of course need to ensure that every applicant is able to afford their repayments of their loan, which is why we employ expert underwriters who look at each and every case individually. By using this method, as opposed to an automated computer-based approach, we are able to take personal circumstances into account and give a real-life decision.
To find out more view our mortgage product page or speak to one of our mortgage consultants on 0330 123 0773 to see how we may be able to help. You may also wish to consider contacting a specialist mortgage broker.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE