The Help to Buy scheme was first launched in 2013 to help first-time buyers get on the property ladder. It’s helped many people buy their ideal home that they wouldn’t have been able to afford otherwise.
Some of those people are coming to the end of their 5-year interest-free period and are now thinking about paying off help to buy loans before they’re charged a 1.75% rate in year 6.
How do I repay my Help to Buy loan?
There are 2 options to repay the help to buy loan:
If you want to stay in the property without accruing interest on both a mortgage and the additional help to buy loan then it makes sense to repay the loan. If you have sufficient funds then you can simply pay off the loan or you can re-mortgage. A re-mortgage will allow you to pay off the loan and be left with one mortgage to cover all of your borrowing.
You will need a Help to Buy valuation from a RICS member to determine today’s property value. We have provided lots of these reports and one of our team of chartered surveyors can help you through the process. You will repay the same percentage that you borrowed of the property’s current valuation. For example, if you bought a house for £200,000 and borrowed 20% which is £40,000 and the property is valued at £220,000 in the current market, then you will repay £44,000 (20%).
Selling your property
If you don’t pay off your Help to Buy loan whilst living in your property then you will have to surrender 20% of the property’s sale price or current market value to the government when you sell it. In other words, if your property has increased in value then you will surrender more than the initial value of your help to buy loan.
If you need any further information or would like to discuss a help to buy valuation then please call us now on 0116 222 7575.
Watch this video on “Repaying the Help to Buy Equity Loan” as explained by Help to Buy Midlands: