Everything You Need to Know About Redeeming Your Help to Buy Loan
The Help to Buy scheme has been a game-changer for first-time home buyers across the UK, particularly here in the East Midlands with many new developments being built over the last decade since its introduction. It was a government initiative designed to make the dream of owning a home more attainable. But what happens when it’s time to redeem your Help to Buy loan? This guide will walk you through the process, benefits, and key considerations, alongside real success stories and tips to make your journey smoother.
Understanding the Help to Buy Scheme
First, let’s recap what Help to Buy entails. This scheme offered an equity loan to first-time buyers, allowing them to purchase a new build home with just a 5% deposit. The government lends up to 20% of the property value (or 40% in London), making mortgages more accessible and affordable. This financial leg-up opened doors for many who otherwise couldn’t step onto the property ladder.
Benefits for First-Time Buyers
– Lower Deposit: Only a 5% deposit is required.
– Reduced Mortgage Rates: A smaller mortgage often means better rates.
– Accessible Property Ownership: An opportunity to own a home in a competitive market.
When and Why to Redeem Your Loan
Redeeming your Help to Buy loan becomes pertinent in several scenarios:
1. End of the Interest-Free Period: The loan remains interest-free for the first five years. After this, interest starts accruing, prompting many to consider repayment. Many loans have either come to the end of the interest free period or will do so soon.
2. Selling Your Property: If you decide to sell your home, you’ll need to repay the equity loan.
3. Remortgaging: Some choose to remortgage their home to repay the Help to Buy loan; often to avoid the accruing interest.
Considering the Right Time
Timing is crucial. Assess your financial situation, the property’s value, and market conditions. It’s not just about the ‘when’ but also the ‘how much’, as it is important not to forget the repayment amount depends on your home’s current value, not the amount initially borrowed.
Steps you need to consider –
1. Valuation: Get your property valued by an RICS accredited surveyor to determine the current market value of your home.
2. Contact Your Solicitor: Inform your solicitor of your intention to repay the loan.
3. Seek Financial Advice: Consult a mortgage broker to understand the best course of action, especially if considering remortgaging.
4. Repayment: Pay the loan amount based on the current property value.
Success Stories
Hearing from those who’ve successfully navigated this journey can be inspiring. Take Lucy from Nottingham, who bought her first home with a Help to Buy loan. After five years, as the interest-free period ended, she decided to remortgage and fully repay the loan. Lucy’s timely decision saved her considerable sums in the long run and has given her full ownership of her property.
Tips for Applicants
– Plan Ahead: Consider your options well before the interest-free period ends.
– Seek Professional Advice: Don’t hesitate to consult experts for valuation, financial and legal advice.
How Bramble and Wagg Can Assist
Our team at Bramble and Wagg has undertaken lots of valuations for clients looking to redeem their Help to Buy loan. From advising on when to redeem your loan to assisting in the valuation and repayment process, we are here to ensure your journey is smooth.
Redeeming your Help to Buy loan is a significant step in your homeownership journey. With proper planning, expert advice, and a clear understanding of the process, you can make informed decisions that best suit your financial future. At Bramble and Wagg, we’re committed to guiding you through this process wherever you live within the East Midlands. We even have national partners who can help if you live further afield. So, if you are considering redeeming your Help to Buy loan please press the ‘Contact Us’ button at the top of the screen, call us on 0115 77 33 000 or email sales@brambleandwagg.co.uk
