Remortgage for first time buyer

adswheatos1983

Good morning, I'll try keep this as short as possible.

So we bought our house for £160,000 4 years ago, we paid 5% deposit and had a mortgage of 75% and borrowed 20% from the government and Bovis.

I've changed my job recently and doubled my annual salary so now we're looking at an extension, so can we remortgage as we want to borrow around £30,000 or would we need a loan?

I've searched my credit history and the 20% we borrowed from the government/Bovis doesn't show on there so do the banks etc actually know you have that debt as well?

Hope this makes sense.

Cheers

Thrugelmir

From the Help to Buy Guide.

Q After purchasing my home, can I increase my mortgage or take out another loan?

Not without permission from the Agency’s Mortgage Administrator. Further advances must be approved by the Agency’s Mortgage Administrator. Advances to be used for staircasing or repaying the equity loans will usually be welcomed and approved. Advances for other purposes will be considered by the Agency’s Mortgage Administrator on a case by case basis (see question below
regarding extending or altering the property).

You can transfer your mortgage to another qualifying lending institution (see page 17), following prior permission from the Agency’s Mortgage Administrator. However, you must ensure your new lender is informed that your home is a Help to Buy property with a second charge entitling the Agency to a share of the future sale proceeds.

The Agency’s Mortgage Administrator may decline permission for further advances or transfer to another lender if after assessment they consider you may be putting yourself in an unsustainable financial position.

Q Can I extend or alter the property?

Not without permission. Because Help to Buy is designed to help people move up the housing ladder, you should consider repaying part or all of the Agency’s contribution before making plans for improvements or alterations. This is because the Agency is seeking to help future aspiring buyers and may use the proceeds of
these repayments to make more assistance available. Therefore, consent will not usually be granted for significant home improvements. The Agency’s Mortgage Administrator will act reasonably in considering any application and will review cases of hardship if, for example, property modifications are required for a disability.

When your property is sold in the future, if improvements have been made with the approval of the Agency’s Mortgage Administrator, these will be ignored when your property is valued to work out how much should be repaid to the Agency.

SuboJvR

I think it may be wiser to remortgage to try to buy out the Help to Buy loan in the long run, then you are no longer restricted about what to do with the house. However consider:

- You aren't paying interest on the HTB loan at the moment (although if your house value has gone up, the HTB portion will also have increased).
- Therefore if you remortgage to pay off the HTB loan then you actually will end up paying more interest on that money.
- Remember HTB is for people who essentially can't afford to save a higher deposit/initially afford the higher repayments associated with a 95% mortgage. Perhaps you no longer fall into that category, which is fine - but in your shoes I'd certainly be looking to try and remove the HTB "restriction", although potentially only once it starts attracting interest.

Alternatively, save. If you can get a savings account with a higher % interest than you are paying on your mortgage currently, then it's worth doing. You could save your extra income until you have enough to buy out the HTB loan, or half of it (as you can pay it off in full, or 50% of the valuation of the house).