I bought a new house from my daughter four years ago with Help to Buy.
My daughter wants her name to be removed from the mortgage loan we had under the Help on Buying scheme since 2014 and I want to release the loan for Help to buy and get a new mortgage on the property with my husband.
I'm not sure how to do it.
Thousands of borrowers were given a step on the real estate ladder through Help to buy
I wish to take the following steps:
1) I have to pay the Help to Buy amount of 20 percent and any valuation of the property.
2) Remove the name of my daughter from the mortgage loan, at the same time I want to take my husband in the mortgage so that we can live in the house, but pay the future part of my daughter in the house.
Once we have paid the money under Help to Buy, should we get permission from the Help to Buy scheme to add my husband's name to the mortgage?
Or is it not necessary to involve the Aid Buying scheme because the loan has been paid to them? SN
Sarah Davidson, of This is Money, replies: The government's help to buy a stock credit scheme, which was launched just over five years ago, and just like you have thousands of homeowners who have benefited now realize that they have to pay interest.
Help to Buy loans gave borrowers an interest free amount of five years to 20 percent of the value of the property to buy a new house, provided they deposit a deposit of 5 percent. This allows them to get a mortgage at a 75 per cent loan-to-value and significantly reduce their costs at the time of purchase.
In return, buyers agreed to pay interest on the Aid to buy loan when the five years had passed and the share of government in the house was a percentage and would therefore rise in line with the value of the property.
The mortgage market has since decreased and house prices have risen. As a result, many have opted to re-pay for a higher amount and use this money to repay their Help-to-Buy loan plus the government's share of any value increase in the value of the property.
Once you have repaid the loan and have settled the extra part that you owe to the government, you determine what you want to do with the property and the remaining mortgage.
However, you should consider a few things.
First, if you have to apply for a larger mortgage to repay the Help to Buy element, this will affect the loan-to-value of your new mortgage.
Most lenders limit the mortgage amount to a maximum of 95 percent of the total value of the property, and the higher this LTV percentage, the higher the mortgage interest and the monthly payments.
Secondly, you must be sure that you can afford to repay the mortgage at the new rate.
If your daughter wants the mortgage and your husband wishes to agree, the lender will assess whether you can pay the new mortgage on the basis of the joint income of you and your spouse.
The income of your daughter will no longer be relevant for the mortgage application.
Thirdly, if your daughter is happy that her assets remain in the home, but her name comes from the mortgage, you should consider the amount she owes as her share and whether this can change if you want to pay her in the future.
Its share will be worth something in today's property values.
If she no longer contributes to the mortgage, it may be that you agree this amount with what she will owe, even if you transfer the money to her within 12 months.
But you can agree that if the property rises again in value and is therefore more valuable when you repay its share, it owes a larger amount to reflect its percentage ownership. This & # 39; share ownership & # 39; would also be the case if the property would lose value before you pay back the hair.
The safest way to manage these variables is to instruct a lawyer to draw up a property agreement that specifies exactly who owns what and how it should be valued.
This will also be necessary if your daughter remains on the property deeds for the property.
The mortgage lender will also want to know if your husband is being added to the deeds, and a lawyer is best placed to advise you on this.
Once all this has been clarified, you can start looking for a mortgage.
To help you understand the next steps, we asked David Hollingworth, mortgage broker London & Country, to answer your questions.
Hollingworth: Once you pay back the loan and valuation of Help to buy, you can change the mortgage without permission
He said: the first element of your question is the repayment of aid to buy a stock loan.
If you intend to keep the stock loan in place, you must request permission from the administrator of Help to Buy, whether or not given.
However, since you are planning to pay the loan for buying shares, there will no longer be any involvement with the manager of the scheme once it has paid off.
The other restructuring could be linked to achieve all your goals at the same time.
In the beginning, however, you must understand the amount needed to repay the Loan to buy loan and to buy out each share of your daughter.
The outstanding loan is calculated by the administrator of Help to Buy with the same percentage of the current value of the property as in the purchase price, in this case 20 percent.
If the property has increased in value, the refundable amount has been increased. For example, if a property was originally purchased for £ 200,000 but is now worth £ 225,000, the equity loan has now risen from the original £ 40,000 to a current £ 45,000.
There is a clear process for determining the refundable amount for which you have to provide a valuation of an expert certified by a Royal Institution of Chartered Surveyors (RICS).
That involves costs, but this will be necessary to start the process with the help agent to buy.
If you have a good idea of the probable value, you can at least consider how the new mortgage can accumulate to finance the repayment of the stock loan.
Availability of remortgage options is more limited when the share loan remains fully or partially in force, but many more lenders are open to you on the basis of equity in the home to repay the loan in its entirety.
>> Read more about re-collecting your Help to buy
Each new lender wants to see that there is sufficient equity in the real estate to support the buy out of the stock loan and / or your daughter.
There may be limitations to the maximum percentage of the value of the property that they are willing to lend.
They will also have to make sure that the mortgage will be affordable, so they will have to assess the income and expenses of you and your spouse.
I would suggest that it will also be necessary to seek legal advice for more information about the transfer of assets from your daughter when she is removed from the title and your spouse is added as co-owner of the property.
It is important that all parties understand the consequences and that the process plus the lawyer is crucial to bring all elements together for a smooth transition.