As the end of your Help to Buy equity loan approaches, it’s crucial to understand your options and take proactive steps to ensure you’re financially prepared. The Help to Buy scheme has provided many with the opportunity to step onto the property ladder, but as the loan term draws to a close, it’s time to evaluate your next move. Here’s a comprehensive guide on what to consider when your Help to Buy loan is ending.
Before making any decisions, review the terms of your Help to Buy equity loan. Typically, the loan was interest-free for the first five years. From the sixth year onwards, you’ve likely started paying interest on the loan. Knowing the exact terms, including the interest rate and the amount you owe, will help you make informed decisions.
So what next?
When your Help to Buy loan is ending, you have a few options to consider, depending on your financial situation and your long-term plans for the property. Here’s what you should do:
| Steps | Action |
|---|---|
| 1. Understand the Terms of Repayment | – Check your loan agreement: Know the terms of repayment and when interest starts. |
| – Repayment calculation: The amount is a percentage of your home’s current market value. | |
| 2. Consider Your Repayment Options | – Repay in full: Use savings, remortgage, or sell the property to repay the loan. |
| – Remortgage: Release equity to repay the loan, considering associated costs. | |
| – Sell the property: Repay the loan from the sale proceeds, based on current market value. | |
| – Staircasing (Partial repayment): Repay part of the loan in increments, reducing future interest payments. | |
| 3. Get a Property Valuation | Obtain a valuation from a RICS-registered surveyor to determine the repayment amount. |
| 4. Prepare Financially | – Savings: Ensure you have enough savings to cover repayment. |
| – Budget for interest: Plan for interest payments if not repaying the loan in full. | |
| 5. Seek Professional Advice | – Financial advisor: Get tailored advice on the best option for your situation. |
| – Speak to an advisor: Help with finding the best remortgage deal if applicable. | |
| 6. Contact Your Help to Buy Agent | Notify your local agent of your plans and get the necessary forms to proceed. |
| 7. Act Early | Start the process early to explore all options and avoid last-minute pressure. |