The UK government’s help to buy scheme was a scheme that ran from 2013 allowing buyers purchasing new build properties to have an interest free loan of up to 20% of the property value for a period of five years. After the five years have run interest starts to accrue on the loan and has to be paid back in monthly payments. The interest charged increases every April by adding the consumer price index plus 2%.
When you want to pay back your loan, either in full or part, it is based on the current value of the property. Therefore, if you borrowed 20% when you took out the loan, on repayment you will need to pay back 20% of the current property value. If property prices have risen since you purchased obviously you will need to repay a much higher amount than you borrowed initially.
If you have a Help to Buy Loan which is now into the interest paying period it may be worth you having your property valued to see if you can afford to repay the loan now whilst property values are not at their highest, as this will reduce the amount that you have to pay back.
Many of the Help to By Loans are now approaching the interest paying period and we would recommend speaking to a financial adviser to see whether now is a good time to change your current mortgage provider to cover repayment of this money for the help to buy loan or whether you are better off leaving your in place and paying back the interest.
If you decide to repay your Help to Buy Loan, you will need solicitors to process this for you and we are of course more than happy to help with this.
Please feel free to call our Residential Property Team on 01256 320555 to discuss your options and we can provide you with a quote for the costs to repay your loan, either in full or in part.
