Repaying Help To Buy

The Government Help to Buy scheme was launched in April 2013 but is now closed. The scheme allowed eligible applicants to apply for an equity loan of up to 20% of the New House price, requiring the purchaser to fund just 5% of the purchase price.

You would then need to raise the remaining 75% by way of a mortgage. You must borrow at least 25% of the purchase price to qualify for the scheme. Not all lenders supported the scheme. The 20% equity loan is free for the first 5 years and no payment is made by you. From year 6 onwards a fee of around £60 per £40,000 of equity loan taken becomes payable monthly. This fee does not reduce the 20% equity loan and is in effect a service charge. This fee will increase annually. The 20% equity loan becomes repayable after 25 years, or upon earlier sale or you can repay at any time.

The amount repayable reflects the market value at the time of disposal so if property prices increase the amount owed will increase, equally if prices fall the amount payable will be less than originally taken from the scheme. We are experts in helping people who now want to buy out of the scheme so please do get in touch if this is something you are considering.

This process may seem quite daunting, but Simply Money can assist you every step of the way. Paying off the Help to Buy equity loan is particularly important once your initial five-year interest free period has or is approaching the end as you will need to pay the monthly interest fee outlined above to the Help to Buy agent . The monthly interest payment is based on the amount the Government provided as an equity loan and the payment will not reduce the overall debt.

As well as advising and offering solutions to remortgage to pay off the Help to Buy equity loan, we also take you through the process step by step and can also help you find a surveyor and even the right solicitor to assist you with the legal requirements.

Remortgaging to pay off Help to Buy may not be achievable or the right thing to do for everyone, but a free, no obligation financial review with us could be the first step on the road to owning your home in full.