As of September 2019, Help to Buy homeowners in England will be able to take out mortgages over terms of up to 35 years.
This is great news for existing Help to Buy users. These homeowners may now find it easier to remortgage, which in turn can help them avoid high interest rates by paying off their equity loans.
Remortgaging at the end of the 2- or 5-year fixed-rate loan period means that borrowers can take advantage of current low-interest mortgage offers. These deals are likely to be better than the lender’s default standard variable rate, which is what they would otherwise be moved onto by default.
However, in order to switch to another mortgage provider, there is normally a requirement to pay off the existing Help to Buy loan. In the past, this has been difficult for those without extensive savings. With the previous mortgage term cap of 25 years, meeting affordability requirements for the level of borrowing required to pay off the equity loan and take out a mortgage was challenging.
Fortunately, the introduction of 35-year terms means that monthly repayments, and therefore affordability, are better. This change may therefore open up the possibility of remortgaging and paying off equity loans to a greater number than before.
For Help to Buy homeowners wanting to take advantage of the 35-year mortgages, the first step will be to have an RICS valuation of the property done by an RICS-certified surveyor. For the valuation to be valid, it must meet strict Red Book and Target criteria. Such valuations are valid for 3 months from the date of the valuation, so the following steps – instructing a conveyancer and redeeming the loan – need to progress quickly.
Find out more here: Help to Buy Valuations and RICS Valuations
