Help to Buy Equity Loan & Remortgage Advice in Sheffield

Help to Buy Mortgage Advice in Sheffield

During the aftermath of the credit crunch in 2013, the mortgage market was hanging on by a thread and the government needed to try and save it. To get the market to bounce back and to give people more confidence, they introduced the Help to Buy equity loan scheme.

This scheme gave First Time Buyers in Sheffield that little push that they needed to get their mortgage journey back on track.

The basics of the Help to Buy equity loan

The Help to Buy equity loan allows you to make up a total of a 25% deposit for a newly built home. You will have to produce at least 5% for your deposit and then the government will loan you the rest to make up 25%. This then leaves you with a 75% mortgage to pay off.

You will need to remember that the percentage that the government give to you is not a gift, it’s a loan that will need to be paid back. You have 5 years to pay off the loan, otherwise, you will start receiving interest on it.

If you want further Help to Buy Mortgage Advice in Sheffield, don’t hesitate to call our Help to Buy Mortgage Advisors for free today.

What happens if I can’t pay off the loan within 5 years?

As a Mortgage Broker in Sheffield, we will help you manage your finances and may even be able to reduce your monthly outgoings which could be incredibly useful if you are struggling to pay off the loan from the government.

We have seen many situations where the homeowner can’t afford to pay back the loan, so if you are in the same boat, please don’t panic, we can try and help!

After 5 years, the starting interest rate on the loan will be 1.75%. However, this will slowly increase by the year if you still haven’t paid it off. When the interest repayments kick in, some customers may struggle to keep up with their payments. When this is the case, people may consider trying to remortgage.

Remortgaging after a Help to Buy mortgage

Borrowers who are struggling to pay off the loan may look at remortgaging to help them out. Occasionally, this doesn’t work and lenders may reject your application because they know that you are remortgaging to pay off the equity loan.

There are some restrictions on the maximum loan-to-value when raising capital to repay an equity loan. Some lenders may be more generous and allow you up to 95% though. One of the advantages of repaying the equity loan in full is that you will have 100% ownership of the property and it won’t be shared with the government anymore.

If you can’t find a lender that is willing to lend you the full amount that you need to repay your Help to Buy equity loan, you could look at “staircasing”. This is where you gradually pay off the loan in instalments over a period of time. However, this will take a lot longer and you can only do it in multiples of 10%. To find out more about ways to pay back the equity loan, feel free to get in touch with a Help to Buy Mortgage Advisor in Sheffield today, we are more than happy to try and help.

For more Help to Buy Mortgage Advice in Sheffield, get in touch with your Help to Buy Mortgage Advisor in Sheffield. We offer a free Help to Buy mortgage consultation here at Sheffieldmoneyman, so feel free to get in touch.