Paying off Help to buy

confusedinstaffordshire

We took advantage of help to buy scheme in the early days and it was a good move for us. We bought at a price lower than the local market value (before builders had the foresight to hike the prices) and actually, for all the criticisms ive read about the scheme, for us the cost difference between taking the scheme or mortgaging the full amount from the outset os negligible.
However, we are now at the point where we have enough equity to comfortably mortgage out the loan and this is where I received some information that I have been unable to verify. We have been told by our current mortgage provider that the only way we could pay this off os by taking a further advance. I have had a quote for this and it adds £270 per month to what we already pay and we would be locked in for 3 years. The existing deal on our mortgage is up in 12 months time but the mortgage provider state we would still require a further advance rather than a remortgage.
Also, they have stated that we need to instruct a solicitor to remove the governments charge on the property.
I have searched online and looked through the information given to us by help to buy and cannot find anywhere that we 1) can only have a further advance rather than remortgage and 2- need a solicitor.
The only info I can find is that the scheme needs to agree any further borrowing and the fees they charge.
Any help or advice in this would be appreciated!

da_rule

In 12 months time I'm sure you could just increase the remortgage amount (we did - all that was required was that the LTV didn't go below 80% as it was classed as debt consolidation). Obviously whilst you're in a fixed term it's up to the lender to a certain extent as to whether they're willing to advance more funds under the current mortgage or start a second mortgage.

In terms of the solicitor, if you were paying it off with your own money then no you wouldn't need one. However, you are using funds from a lender so they can insist on a solicitor. This is really to protect their funds. If you were a less than honest person, you could just take the funds and then not pay off the charge which can obviously cause the mortgage company problems should they ever need to take possession of the property. Whereas, a solicitor will be instructed, by the mortgage company but at your cost, to only use the funds to pay off the help to buy loan and ensure that the charge is removed.

kingstreet

Your lender is telling you you can't remortgage and the lender is correct from its perspective as your current lender.

It means a new mortgage from a new lender on the same property, to replace the existing mortgage, and to borrow more, if required.

You cannot do such a thing with the same lender as there is no change to the mortgage deed.

Your option with your existing lender is a further advance, or additional borrowing. If you want only a new rate, that is a customer retention product, again not a remortgage.

Your first option (assuming you want to pay no ERC) is to leave things alone for twelve months, and then remortgage to a new lender raising enough to repay the existing mortgage and HTB Equity Loan.

Alternatively, you can take additional borrowing from your existing lender, or from a third party which will secure its interest with a second charge after HMG is repaid and its charge lifted.

Instructions in what happens can be found here;-

http://www.myfirsthome.org.uk/iwantto/redeem/

When remortgaging, a solicitor will supervise the legal aspects, including the redemption of both charges and the placing of the new lender's charge over the property.

Going the second charge route, the solicitor will remove the HMG charge and replace it with the new lender's.

confusedinstaffordshire

Thank you for both of your replies.
Ive worked it out and even with incorporating the loan debt we would be at 74% LTV and our income should cover what we need to borrow.
Ive been guided towards my decision and will wait 12 months and move lenders.
I am right in assuming that this would be just like any ordinary remortgage (apart from fees to help to buy scheme that we will pay)? The lender I would look to move to offers remortgage with free legal fees so I think ill be off to them. My assumption was that it would be cheaper and easier to stay with the same lender but this obviously isn't the case. ��

da_rule

The free fees offer may not apply to the legal work relating to removing the Help to Buy charges, so you may still have to cover these yourself.