Remortgage HtB equity scheme

mrsunnybunny

I just came across this article, basically saying that's it's very difficult to remortgage the HtB equity scheme after the initial period and many people will be stuck on the SVR as lenders won't take the government equity into account.

I note the article is more than a year old and the scheme has developed since; is that still true? Can't say I fancy being put on SCR or a 90% LTV product after 5 years!

telegraph.co.uk/finance/personalfinance/borrowing/mortgages/11486639/Help-to-Buy-equity-loan-borrowers-face-rate-traps.html

kingstreet

At present there is only one lender accepting a remortgage with the second charge still in place.

You shuld also have existing lender customer retention products to choose from as well.

mrsunnybunny

What are those retention products like?

This seems like a massive rip off - 5 years and suddenly you are on SVR at something like 5% or more if interest rates have gone up!

kingstreet

You would need to ask your lender what customer retention products it has.

Massive rip off? Whoever you borrow from, if you come out of a five year fix and rates generally have gone up, you'll be paying more...?

Verix

And just because there aren't a wealth of HTB remo products out there now doesn't mean there won't be in the future when demand is higher.

Jon_B_2

To be honest, I think this should be brought up by MA's and IFA much more often when considering HTB EL. Fortunately I am ticking away nice overpayments with a view to remortgaging and paying back the EL when my five year fix ends, however I think there should be a warning to those fixing for 2 years that there is no guarantee of a good fixed rate when that deal ends if you plan to keep the EL in place.

kingstreet

We routinely explain the implications and one of the reasons for choosing a particular lender is the lender's history in offering quality retention products to existing borrowers.

We include this in our suitability letters.

It's just as important to point out, for example, that at an SVR of 5.79% it would be unfortunate for someone to end up a mortgage prisoner with Accord due to change of circumstances if there was no retention product available.

One of the reasons we might recommend a lender with a worse initial rate but a lower SVR and/or history of better retention offers.

This isn't just confined to shared equity cases.

mrsunnybunny

Well key difference is that under a normal mortgage it is very easy to move lender and remortgage. With help to buy, this doesn't seem as straight forward, or maybe even completely impossible! Maybe even worse under the London HtB scheme as there are only a small number of people for which banks may not develop any products.

Does anyone know what retention products are currently being offered to those coming out of their deals?

brit1234

The Help to Buy Time Bomb. I recommend that everyone look at the bad elements of Help to Buy before considering it. In reality it only helps the builder inflate prices and leaves the owner with big debt.

I just find it staggering the almost half a million price tags of 1 bed flats being advertised in London.

banks4u

Yes I agree, I remember when I was a underwriter back in the day, companies would always sell for more than the property is actually worth, when the person came to remortgage they didn't have enough equity. I defo think the HTB is a time bomb waiting to happen me the prices they are selling at is rediculous.

mrsunnybunny

banks4u wrote: »

Yes I agree, I remember when I was a underwriter back in the day, companies would always sell for more than the property is actually worth, when the person came to remortgage they didn't have enough equity. I defo think the HTB is a time bomb waiting to happen me the prices they are selling at is rediculous.

I fully agree with apartments. I am looking at a townhouse in good position (30 mins into the city) hoping that there will continued demand further down the line. In my view, Londoners will always look to move into larger properties and out of apartments. With that in mind, hopefully there won't be as much of a risk as I would be taking on an apartment. Its definitely overpriced, but if it can at least retain its current value over 5 years I'll be happy