Help to buy Householders lose a good remortgages, is it 95% better?

Although the results of HTB in lower monthly reimbursements, the choice is more limited when it is removed

The owners who bought new houses with the Equity scheme of Help to Buy will lose the cheapest rates when the time comes for remortgage.

Although 29 lenders currently accept the loan applications of Buy Aid to buy a house, the image looks very different for those whose initial offers have gone up and need to retire to avoid falling into higher rates.

Help to buy the remortgage of owners with some or all of your government equity loans still in effect you can only choose from a restricted group of lenders, which means that the cheapest rates could be lost.

Only 10 lenders are prepared to accept a request for remortgage from Aid to buy borrowers looking to change from another lender, which means that some homeowners may be better off by letting them buy to buy in full and taking a standard 95 percent mortgage.

Although the results of HTB in lower monthly reimbursements, the choice is more limited when it is removed

Although the results of HTB in lower monthly reimbursements, the choice is more limited when it is removed

This limits the options available to homeowners looking to reduce their monthly expenses now that the first wave of Buy Aid borrowers has begun to repay interest as they finish their five-year interest free periods in government home equity loans.

The capital assistance program allowed people to buy new homes with only a five percent deposit, granting them a five-year interest-free loan of 20 percent of the value of the property to add to this.

This allows them to buy with a 25 percent discount, instead of 5 percent, reducing the cost of their mortgage and encouraging banks and construction companies to consider them less risky and lend them.

The first wave of Help to buy homeowners is coming at the end of those five years without interest and now you must pay a 1.75% interest on the loan, which will gradually increase over time.

The government also has a percentage of participation in the capital of your home, and you want to return the same percentage of your sale, which could benefit from the increase in housing prices.

Owners must now decide whether to continue, pay more for the equity loan, or abandon the ship completely at a standard 95 percent mortgage.

Lenders are often willing to support the government's plan at the point of purchase, but more than a few are not willing to support the same borrowers for a direct remortgage

Nick Morrey of broker John Charcol said: "If the applicant keeps the help deposit to buy, then the amount of lenders looking to lend in that space is reduced compared to the new help to buy purchase mortgages.

"If you are looking to scale, which means returning some of the money from Help to buy, some lenders will help more, but not many."

When making a ladder, the borrower must pay a minimum of 10% of the value of the property at a time, with a management fee of £ 200 each time he does so. They must also pay an updated valuation of the property.

If a borrower wishes to pay more than 10 percent, he must do so in 10 percent increments.

Homeowners looking to fully repay their loan may find themselves in a better position, according to Morrey.

WHAT PROVIDER OFFERS HELP TO BUY REMOTE?
Aldermore Do not
Barclays Yes
Chorley Building Society Yes
Cumberland Building Society Yes
Dudley Building Society Do not
Halifax Yes
Kensington Do not
Leeds Building Society Yes
Lloyds Bank Do not
Mansfield Building Society Do not
Monmouthshire construction company Yes
Nationwide Building Society Do not
NatWest Do not
Newbury Building Society Yes
Accurate mortgages Do not
Society of the Principality Do not
Royal Bank of Scotland Do not
Santander Do not
Skipton Building Society Yes
Swansea Building Society Do not
Teachers Building Society Yes
TSB Yes
Virgin Money Do not
Source: Rateswitch

"If they are looking to repay the entire Aid to Buy loan, then almost all the lenders will accept it, because when it finishes, the Aid to Buy is eliminated, which means that the mortgage is just a standard remortgage," he said.

"It's interesting that lenders are often willing to support the government's plan at the point of purchase, but more than a few are less than willing to support the same borrowers for a direct remortgage."

What is Help to Buy and how does it work?

Help to Buy is a government plan that offers both first-time buyers and those who change homes a capital loan of up to 20 percent, or 40 percent in London, to help them buy a new construction property.

This means that buyers must deposit a deposit of 5 percent to guarantee a loan mortgage at a value of 75 percent, and the rest of the loan with a mortgage.

In London, buyers can deposit 5 percent and get a 55 percent mortgage loan at value.

The government's plan is designed to make the purchase more affordable as the lower the value loan, the lower the borrowed amount and the mortgage rates, and therefore, the monthly reimbursements should also be lower.

The problem is that after five years, you should start paying interest on the loan.

Because it is a participatory loan, the government will also own a portion of any increase in the value of your property. This means that the loan grows as your property grows in value.

However, if the value of the property decreases, the size of the loan will be reduced.

As of April of this year, the first Help to Buy users began making their monthly payments.

These payments are made up of 1.75 percent interest on the loan, which increases each year by the retail price index plus another 1 percent.

Borrowers wishing to repay part of the HTB loan, or ladder, will have more options open

Borrowers wishing to repay part of the HTB loan, or ladder, will have more options open

Borrowers wishing to repay part of the HTB loan, or ladder, will have more options open

Is a 95 percent mortgage a better option?

It is possible to buy a house without raising a large deposit, if you take a 95 percent mortgage.

With one of these offers, first-time buyers able to pass the mortgage affordability tests could reduce a 5 percent deposit of £ 10,000 and buy a £ 200,000 house, and with more lenders offering these products, the rates become more competitive.

Nor is it restricted to buying expensive new constructions with this type of product.

But, in the long run, is it cheaper to simply leave a 5 percent deposit instead of applying for a Home Equity loan?

Morrey said: "If you bought 95 percent, owning the whole property, generally, after a few years, the value loan would fall to 90 percent or less, at which time the products start to be cheaper and that It would save you money, assuming the rates do not change.

"Because there is no Help element to buy, then your product choice is from all the lenders that offer products appropriate to your situation."

By not getting a Help loan to buy, you would have access to the entire market, so there is a possibility that you can get a better deal in the future. In addition, although 95% of mortgages are more expensive, you will not be left with a mortgage loan pending at the end of your term.

However, a 95 percent mortgage carries its own set of risks. A 5 percent deposit is not a great buffer against negative capital, and if home prices fall, you may owe more to the lender than your house is worth.

Larger deposits are always preferable, since they generally ensure lower rates for the owner. The lower the rate, the lower the monthly payment, which means you can save thousands of pounds in interest over the years.

> Read our 95% Mortgage Guide

95 percent of mortgages will be more expensive but could allow you more options along the way

95 percent of mortgages will be more expensive but could allow you more options along the way

95 percent of mortgages will be more expensive but could allow you more options along the way

I am looking for remortgage but I have a Help loan to buy, what should I do?

Every time you come to remortgage it's generally worth taking a look at a few different mortgage providers to make sure you're getting the best deal.

You can do it yourself by going directly to each lender or you can use the mortgage search tool of This is Money, which allows you to search for the lenders that offer Help to Buy remortgages.

It is always a good idea to seek independent financial advice while making this type of decision.

Finally, you can find the This is Money guide to relaunch with a help loan to buy by clicking here.

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