Expect a surge in demand for Help to Buy remortgages

At the time of taking a Help to Buy mortgage, most customers are focused only on getting the keys to their new home, but five years can go quickly and after this period, interest payments become due on the Help to Buy equity loan. For many, the plan at this stage will be to increase their borrowing with a remortgage to pay off the entire equity loan. This approach gives them access to mortgage products from across the market, but the success of the plan relies on the customers being able to demonstrate the affordability they need to stretch their mortgage borrowing in order to pay off the entire balance.

The outstanding equity loan amount is to be repaid is based on the valuation of the property at the time it is being repaid rather than when it was taken out. Therefore, recent house price increases, will make this more expensive, which could make it harder for customers to achieve the loan size they need to pay off the whole sum.

On top of this, mortgage affordability is tightening as lenders take into account the increased cost of living as part of their income and expenditure assessments. Moreover, rising rates will also negatively impact how much people can borrow. So, there’s a good chance that many customers who had planned to pay off their Help to Buy equity loan at the point of remortgaging may now be unable to do so.

In these circumstances, customers will need access to a Help to Buy remortgage that enables them to refinance their original Help to Buy mortgage, whilst leaving some, or all of the equity loan, in place. And, given the popularity of the Help to Buy scheme and current market dynamics, it’s likely that brokers are going to see an increase in the number of customers looking for this type of product.

It's important, therefore, to become familiar with those lenders that offer Help to Buy remortgages as not all lenders do. In fact, many lenders that offer Help to Buy purchase mortgages do not offer Help to Buy remortgage product and finding a Help to Buy remortgage can be even trickier for those customers who do not meet the criteria of high street lenders due to their credit profile or the way they earn their income.

This means finding out about which lenders offer Help to Buy remortgages, their products, criteria and service levels so that you can be sure you are ready to match your customers with the best solution for their needs when you start to see the surge in demand for Help to Buy remortgages.