Have you found that Re-mortgaging with a Help to Buy mortgage isn’t quite as simple as you might think?
If you are looking for a straight swap, then it is pretty straight easy, a few lenders are happy to accommodate these types of mortgage and you should get a pretty decent rate depending on your circumstances of course. If you need some help comparing, give me a call on 01233 512012 and I can carry out a free mortgage review for you.
However, where it’s not so simple;
- Your HTB interest free period is due to end.
- you need to raise money for home improvements.
- you need to raise money to buy out your help to buy.
- you would like to raise money for debt consolidation.
If you have already looked in to refinancing, no doubt you will have hit some brick walls, it’s either not in the banks lending policy or they are just not interested in this type of lending. Lenders are not keen to provide further borrowing where the HTB will remain.
This means you can either look for a new fixed rate, borrowing the same amount of money or you can purchase the share of your property that the Governmenht own with the HTB loan. Buying out the HTB may allow you to borrow more money for other purposes such as home improvements or debt consolidation. So you need to know what is the best option. Buy out the Help to Buy now, buy it out when the interest free period has expired or buy out when the government want their money back.
Consider, the HTB scheme will charge interest on the loan after 5 years along with the fact that they are also taking an equity stake of 20% of any capital growth your home produces. Is it better to buy out the Help to Buy as soon as you can? This does mean increasing your mortgage loan unless you have the cash in the bank but is the monthly cost of this extra borrowing cheaper than the interest charged on the HTB loan added to the money you are losing by giving 20% of the increase in value of your home each year.
It’s complicated for sure, but we can help you make the right decision, we can calculate the numbers to check which option is best for you. Call us on 01233 512012.