Repaying Your Help To Buy Equity Loan

Remortgaging your home can be a good way to pay back your Help to Buy Equity Loan (the government loan that formed part of your Help to Buy Mortgage). When you consider that you will need to start paying back the loan after 5 years, this becomes an attractive prospect, as you can focus more on paying back the rest of your mortgage.

A potential advantage of repaying the equity loan in full, is that any future uplift in the value of the property after you pay back the Help to Buy, will be 100 per cent for your benefit and won't need to be shared with the Government.

To be considered for a Help to Buy Remortgage, most lenders will require that you’ve raised at least 10% of the equity on your current mortgage.

Work Out What You Owe:

• You bought a home worth £400,000 with a 20 per cent equity loan of £80,000 using Help to Buy in April 2013.
• The property is now worth £500,000, a £100,000 uplift in value. This is equivalent to a 25 per cent rise in value over five years - roughly 5 per cent a year.
• If you decide to repay the full equity loan back to the Government today, you owe them the original £80,000 loan PLUS 20 per cent of the £100,000 change in value.
• This equates to £80,000 + £20,000 = £100,000.