Help-to-Buy equity loan - remortgage + deed of postponement discussion

FinancialDunce

In the hope that this may help others, I want to share my recent experience of remortgaging whilst retaining the Help-to-Buy equity loan, which is still ongoing after many months. And also to ask whether anyone else has had similar experiences? I couldn’t find any threads on this, so please do let me know if there’s an existing thread I should have posted on.

TLDR: The moral of the story is start the H2B remortgaging process at least six months in advance and never assume that the H2B agency has followed through – so chase, chase, chase!

Background:

Upon purchasing the property in 2019 I got two-year fixed term mortgage for my share, along with the 40% Help-to-Buy equity loan. Target HCA are my H2B agents and despite some expected niggles, it was relatively plain sailing. 

Fast-forward to the beginning of this year, I was ready to start the re-mortgaging process. In order to remortgage and keep the equity loan, you need to get a Deed of Postponement via the H2B agency – this is where it gets complicated and is taking many months longer than anticipated.

Timeline of the process so far:

• February 2021: Received mortgage offer from NatWest, which was rescinded a few weeks later as they had concerns about the ground rent potentially going up in five years. This is obviously a separate issue to H2B but worth bearing in mind to check that the bank you’re applying to is happy with ground rent increases when dealing with flats.
• April 2021: Received new offer from Halifax - great! I was ready to start the process of getting a Deed of Postponement from Target HCA. 
• May-June 2021: After weeks of conflicting advice and back and forth with Target to confirm what was needed to apply for the Deed of Postponement, I sent through all the docs.
• Early-July 2021: Received an email stating that they wanted clarification on a couple of points. I called them to clarify, followed by an email to confirm in writing. They confirmed that they would now pass the case onto the Deeds team and the deed should be ready in 4-6 weeks.
• Mid-July 2021: Received another email asking me to clarify the same points. I responded clarifying again, assuming(!) that it would finally be sent to the deeds team. NOTE - always phone a few days later to confirm that it has in fact been sent to the Deeds team (I didn’t do this).
• 31 August 2021: Received an email asking me to call them. I thought ‘great, the deed must finally be ready!’. But NO, they wanted to clarify the exact same points AGAIN! So now, it’s going to take another 4-6 weeks, during which time my mortgage offer will run out, so will need to ask for an extension.

Since April, when my original mortgage period came to an end, I’ve been paying £200pm interest on the monthly mortgage, which by the time it’s sorted I expect to have paid at least seven months of this i.e. £1,400+ wasted money!

Conclusion/recommendation:

1. Start the Help-to-Buy remortgage process at least six months in advance, and 
2. Never assume that the H2B agency had followed through with sending it through to the deeds team and call again and again until they have!

KLC17

Hi, I am currently in a very similar position to what you have described in your post. Seem to be stuck in a never ending cycle of phonecalls, emails and being fobbed off! 

Has your issue been resolved now? I’m hoping so for you and also to give me the hope that there may be light at the end of the tunnel!

FinancialDunce

Apologies KLC17, only just seen your comment from last week (my notifications weren't set to on - they are now) - I'm so sorry to hear that you're in a similar situation. Since my original post and another frustrating wave of back and forth, I finally received confirmation in mid-October that the DoP application has been sent for processing. I hope to receive the DoP at the end of Nov, but will believe it when I see it.

What are the specific issues you're having? There have been a few revelations that I think helped break through the cycle since my last post:

• Mortgage redemption statement: In their DoP Customer Information Pack, Target says that clients need to provide a redemption statement dated within the last month when you provide your application documents. However, they don't add that if the process is delayed, you need to get a new redemption statement to be within a month of when they eventually do send it through for processing, which as we know is most likely to be several months later. 
  
  For example, my original redemption statement was issued in early May and it was only in mid-September that they said 'oh by the way, that one doesn't count now, sorry we didn't mention that before!'. And it took at least two weeks to receive a new one from the bank, which delayed things even further.

• Breakdown of additional lendings: This was another constantly moving target. £1000 was added to the mortgage offer for solicitor's fees (fine). However, as I'd paid several months' extra mortgage payments since the original application, they kept on saying "your new mortgage redemption statement shows that you owe less than you're asking to borrow - you need to get a new mortgage offer to reflect that". I discussed this with two separate telephone reps basically begging "but how can it ever match exactly, do I need to apply for a new mortgage offer every single month while this goes on?!". They literally couldn't give an answer apart from yes, it needs to match, which supports this crazy circle that so many of us go through. However...
  
  After much digging, it transpires that they have a £2,000 waiver that allows for the unavoidable discrepancies between the mortgage offer and the latest redemption statement (which most of their staff don't seem to know, or tell). My mortgage payment 'discrepancy' was just under £2k, but with the solicitor's £1k fees that made it £3k. However, I sent a very detailed email and breakdown (that I'd be happy to send a template of), which appears to have worked.

• Mortgage offer: If you have three months or less of your mortgage offer, this might be the time to ask for an extension. Allowing for another month of back-and-forth with Target, followed by the official (and non-negotiable apparently!) 4-6 weeks of processing the DoP itself, then finalising the actual mortgage. Getting the extension safety net (my bank gave a six month extension within a few days) is worth it to avoid having to start the process with Target all over again from scratch if it runs out.

• Email to target: After getting these ducks in a row, I put my 'lawyer hat' on and sent a formal email to them, briefly outlining the situation and bullet-pointing exactly what steps they needed to take next. Along with the new extended mortgage offer and latest redemption statement I also attached all the other documents again to basically start afresh. I also included a table outlining them with columns for dates/notes (again, I'm happy to share this template email).
  
  Don't forget to include your account number in the email subject e.g: URGENT DoP - MSQXXXXXX | POSTCODE | FIRSTNAME SURNAME

• Call them every day: After sending the email, I called them every day (0345 848 0235) to check on progress. After some more back and forth regarding the lending breakdown, about a week later they finally confirmed that the DoP had been sent through for processing. This reminds me that it's been a couple of weeks since they 'confirmed' that it's being processed so I should call again to check on progress.
  
  N/B I learnt that you can call them within half an hour or so of sending an email as it automatically goes onto your file.

• Submit a complaint: You can submit a complaint to Target (I did upon their own suggestion) for compensation for financial losses (e.g. extra interest on monthly mortgage payments). I've asked them to put mine on hold until the DoP issue is resolved, after which I'll submit a request for reasonable compensation. If they don’t provide it, the next step would be the Financial Ombudsman Service.

Apologies for the super long post - hopefully there are some nuggets there that might help!

KLC17

Hi thanks so much for your reply.

I have encountered similar issues:
My ex is remortgaging with additional borrowing to buy me out; the original lender we are currently with won’t allow additional borrowing on a Help to buy mortgage (something we were blissfully unaware was fairly common). He has a mortgage offer from another bank sorted but there was an early redemption charge above the arbitrary £2000 so Target refused permission. 

This took from mid June until the end of September to even get to this point despite his solicitor sending absolutely every piece of paperwork required- there were points where they claimed they hadn’t received items etc.

They then told us they would approve it so long as the ERC wasn’t being paid out of the additional borrowing which we worked out we could manage. However, they then said we needed two separate redemption statements (one without the ERC and one with). Nationwide were unable to provide this and had never heard of anything like it so this caused more phonecalls and emails from myself and his solicitor.

The solicitor ended up writing a statement to say that the ERC was being paid separately and that they could check her client account if needed.

I had already lodged a complaint about the terrible communication and time delays between every stage and had been told they’d call me within two days. Two weeks later (last week) I called again and was told that someone hadn’t pressed the ‘submit complaint’ button! But while I was on the phone I was told that they had finally approved the application and had sent it to the deeds department-l have also been quoted 4-6 weeks.

 I haven’t had anything in writing to confirm this; did you ever receive written confirmation? I completely agree with your ‘believe it when you see it’ feeling. I have never come across an organisation so lacking in communication skills or systems that work! It’s absolutely wearing isn’t it! 

KLC17

Oh and, similarly to you, he is now on his second redemption statement and extended mortgage offer. When asked for this, it was made out like the fault was this end rather than the fact that they had spent too long going backwards and forwards. Sorry for the long (slightly ranting!) reply - it’s cathartic to write about it to someone who understands the frustration!

popogogo92

Hi KLC and Financial Dunce, 

I am quickly finding myself down a similar rabbit hole and trying to work out how to claw my way out of it!

Currently, I am in the process of remortgaging my HTB Equity Loan property. There are Early Repayment Charges to pay with my current lender (to the tune of £10,000) - which on the face of it seems insane that I would even contemplate the idea, until you realise that my existing mortgage is subprime and I have managed to correct all the wrongs which have allowed me to get a Mortgage Quote with a high street lender (who is absolutely fine with adding the ERC to the new mortgage).
The numbers are unquestionably more favorable in every sense by remortgaging.

So I have just started finding out what I need to do with Target/HTB regarding the Deed of Postponement - which is when I have found this thread! To say your posts have concerned me is an understatement!

Yesterday I spoke to Target, and their advice was along the lines of "if we see ERCs on the Mortgage Redemption Statement, which then aligns to your new mortgage offer, we will treat this as additional borrowing which is not permitted". 

I have now sent them a letter detailing the specifics of the situation and have asked for their DoP department (as opposed to the call-handler I spoke to) to review and respond to confirm if this is possible. 
Obviously, I am wanting this confirmed prior to spending time and money on solicitors to get all searches etc completed, only to find HTB will not grant a DoP.

Other than the £2,000 tolerance, have you any advice from your journey through the process?

Also, I assume your first words of advice would be to get an extension to the Mortgage offer ASAP?

It seems crazy that they can be this restrictive over something that would actually put me in a better position to staircase/pay off the loan in the years to come.

Apologies for the ramble.