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A Help to Buy remortgage can let you switch mortgage deal while keeping your equity loan, repay part of it or pay it off completely. We explain your Help to Buy remortgage options, how the process works and the costs to consider.
KEY INFORMATION
Jump to: Help to Buy remortgage options | Pay off Help to Buy | What happens after 5 years | Remortgage costs | Help to Buy remortgage lenders | FAQs
Yes. You can remortgage a Help to Buy property, either keeping the equity loan in place or repaying some or all of it.
Your options will depend on your circumstances. Before choosing what to do, it’s important to compare the cost of keeping the equity loan and paying interest on it with the cost of increasing your mortgage to repay some or all of it.
There are three main options:
Which option is right for you will depend on your circumstances and factors such as your mortgage rate, the interest charged on your equity loan, your affordability and how much your property is worth.
Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
Your home may be repossessed if you do not keep up repayments on your mortgage. Please note some branches of Mortgage Advice Bureau may charge a fee for mortgage advice if you go direct. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed. So make sure you use this site, this form or phone number for fee-free advice.
You can remortgage and leave your Help to Buy equity loan in place. How this process works depends on whether you stay with your current lender or switch to a new one:
If you keep your Help to Buy equity loan in place when you remortgage, you’ll continue paying the £1 monthly management fee and any Help to Buy interest that is due.
Bear in mind that the amount you’ll eventually need to repay on your Help to Buy equity loan can rise or fall because it is based on a percentage of your home’s market value at the time you repay it.
Alternatively, you may choose to pay off your Help to Buy equity loan in full when you remortgage.
There are two main ways to do this:
If you’re considering borrowing more to repay your Help to Buy loan, a mortgage broker can help you understand the process, your mortgage options and compare lenders.
Also, bear in mind that the equity loan repayable when you remortgage is linked to your property’s market value.
If you want to pay off your Help to Buy equity loan when you remortgage:
See the Government’s guidance on repaying your Help to Buy equity loan when you remortgage for the full process.
Need a Help to Buy valuation? Get quotes from RICS surveyors in your area.
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If you don’t want to repay the Help to Buy equity loan in full, you may be able to repay part of it. This is known as staircasing.
The process is similar to repaying the loan in full:
A part repayment must be at least 10% of your home’s current market value, and you cannot leave less than 5% outstanding. See the Government’s guidance on remortgaging and borrowing more money for the rules on part repayment.
After staircasing, your remaining equity loan percentage will be lower, so future Help to Buy interest will be calculated on a smaller equity loan amount.
Not necessarily. Whether it makes sense to repay your Help to Buy equity loan when you remortgage will depend on your circumstances.
Keeping the equity loan means you’ll continue paying any Help to Buy interest and management fees that are due. Paying it off may mean taking out a larger mortgage, which could increase your mortgage repayments and the amount of mortgage interest you pay.
Also bear in mind that the amount needed to repay your Help to Buy equity loan is based on your equity loan percentage and your home’s current market value. So if your property has risen in value, you may need to repay more than you originally borrowed.
Our mortgage expert Sarah Tucker says:
“We’re seeing more people choosing to keep their Help to Buy equity loan in place when they remortgage, particularly where the interest rate they’re paying on the equity loan is lower than the mortgage rate available to them. For some borrowers, taking out a bigger mortgage to repay the equity loan could mean significantly higher monthly mortgage payments.
“But it’s really important to understand that paying interest on your Help to Buy equity loan doesn’t reduce the amount you owe. It’s an equity loan, so the amount you eventually have to repay is linked to your home’s value and can go up or down as the value of your property changes.
“That’s why I wouldn’t look at the interest rate in isolation. Compare the overall cost of keeping the equity loan with the cost of borrowing more to repay it, and think about what each option could mean for you over the longer term.”
A mortgage broker can help you compare your Help to Buy remortgage options.
Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
Your home may be repossessed if you do not keep up repayments on your mortgage. Please note some branches of Mortgage Advice Bureau may charge a fee for mortgage advice if you go direct. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed. So make sure you use this site, this form or phone number for fee-free advice.
For the first five years of a Help to Buy equity loan, you don’t pay interest on it, although you do pay a £1 monthly management fee. From year six, interest starts to be charged, although how this is charged depends on which scheme you bought through:
Find more detailed information on how much you’ll pay in interest rates in the Government’s Homebuyers’ guide to the Help to Buy: Equity Loan (2013 to 2021)and Homebuyers’ guide to the Help to Buy: Equity Loan (2021 to 2023).
The interest rate on your Help to Buy equity loan may be lower or higher than the mortgage rate available to you, so it’s important to compare the overall cost of keeping the equity loan with the cost of borrowing more on your mortgage to repay it.
Remember, the interest and management fee you pay do not reduce the equity loan itself. The amount you eventually repay is based on your equity loan percentage and your home’s value at the time, so it can rise or fall as your property’s value changes.
A mortgage broker can help you compare the costs and understand your Help to Buy remortgage options.
When your current mortgage deal ends, you can usually either switch to a new deal with your existing lender or remortgage to a different lender.
If you don’t arrange a new deal, you’ll usually move onto your lender’s standard variable rate, which can change over time and may be higher than the rate you were previously paying.
It’s usually a good idea to start looking at your Help to Buy remortgage options around 6 months before your current deal ends. With a Help to Buy property, it’s particularly important to start the process early as it may involve extra steps, particularly if you are changing lender, borrowing more or repaying some or all of the equity loan.
A mortgage broker can help you compare your available remortgage options and explain which lenders may consider a Help to Buy property.
If you are remortgaging a Help to Buy property without repaying the equity loan, Homes England currently charges a £115 administration fee where permission is needed.
If you are repaying some or all of the equity loan, the Homes England administration fee is currently £200. You will also usually need to pay for a RICS valuation and conveyancing.
Other costs may include:
Before deciding what to do, add up all the costs involved in keeping the equity loan, repaying part of it or clearing it completely. If you’re using a mortgage broker, they can help you with this.
You are in negative equity if your home is worth less than the total you owe on your mortgage, Help to Buy equity loan and any other secured borrowing.
If you are in negative equity, Homes England says you cannot remortgage and borrow more money. If you want to remortgage without borrowing more, you should contact Homes England to discuss your options.
If you are behind with Help to Buy interest or management fee payments, your remortgage cannot progress until you have either cleared what you owe or agreed a payment plan with the Help to Buy Customer Service team.
A number of banks and building societies may consider Help to Buy remortgages, but the lenders and deals available will depend on whether you are keeping the equity loan, repaying it and whether you need to borrow more.
Get fee-free remortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
Your home may be repossessed if you do not keep up repayments on your mortgage. Please note some branches of Mortgage Advice Bureau may charge a fee for mortgage advice if you go direct. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed. So make sure you use this site, this form or phone number for fee-free advice.
It can be, but it depends on your circumstances. Paying off the equity loan means you’ll stop paying Help to Buy interest and the monthly management fee, but you may need a larger mortgage to do it.
Get fee-free expert advice from the Mortgage Advice Bureau.
Help to Buy equity loans are interest-free for the first five years. From year six, interest starts to be charged, although how this is charged depends on which scheme you bought through.
The interest and management fee payments do not reduce the equity loan itself. The amount you eventually repay will still depend on your equity loan percentage and your home’s value at the time.
Yes. You can remortgage while keeping the equity loan in place.
If you stay with your existing lender and do not borrow more, you usually won’t need to apply to Homes England for permission. If you change lender, you will normally need Homes England’s permission and a Deed of Postponement.
If you are repaying some or all of your Help to Buy equity loan, you will need a RICS valuation to establish your home’s current market value.
If you are remortgaging without repaying the equity loan, different requirements apply. Find more information in our guide Help to Buy valuations explained.
A lender may decline your Help to Buy remortgage application if you do not meet its affordability or lending criteria.
You also cannot remortgage and borrow more if you are in negative equity, and any outstanding Help to Buy interest or management fee payments will need to be cleared or covered by an agreed payment plan before the remortgage can proceed.
Having a Help to Buy equity loan does not prevent you from selling, but there are extra steps because the loan must be repaid when you sell.
See our guide to selling a home with a Help to Buy equity loan for the full process.
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