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When do you have to repay your Help to Buy loan?

Help to Buy is a government scheme in the UK which is aimed at helping people, particularly first-time buyers, get a foot onto the property ladder or even move up a rung. The scheme was first introduced in 2013. It consists of several components, including the Equity Loan scheme, Help to Buy: ISA (Individual Savings Account), Help to Buy: Shared Ownership, and a Mortgage Guarantee.
How does Help to Buy work?

Help to Buy works by offering an equity loan to people wanting to buy their first home. Buyers must pay a deposit of at least 5% of the full purchase price of the property bought under the scheme. This has to be used to buy a main home, and can’t be used to buy a second house or a buy-to-let property.

The Help to Buy scheme ended in 2023 and there have been calls to reintroduce it in a bid to further stimulate the housing market.

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What is the current state of the housing market?

House prices dropped for the first time in six months. Surveys show a 1% decline in prices last week as high mortgage rates continued to make affordability difficult for would-be buyers. Ebbs and flows are predicted throughout the year.

According to Property Week, if the government is to kickstart the housing market, the Help to Buy scheme must be reintroduced as soon as possible.

What happens if I sell my property?

If you sell the property, you are required to repay the Help to Buy loan. The repayment amount will be a percentage of the property’s current market value, equivalent to the percentage of the original loan. For instance, if the initial loan was 20% of the property’s value, you’ll repay 20% of the sale price.

What happens at the end of the loan term?

The Help to Buy equity loan is interest-free for the first five years. After this period, you’ll start paying interest on the loan.

The loan term is generally 25 years in total. If you haven’t repaid the loan by the end of this term, you’ll need to repay the outstanding balance, either by refinancing or selling the property. If you want further information and help to navigate your Help to Buy loan repayment, professionals such as https://www.samconveyancing.co.uk/news/conveyancing/help-to-buy-repayment-after-5-years are on hand.

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Can I make a voluntary repayment?

You have the option to make voluntary repayments at any time, either in full or in part, without having to pay a penalty. This can help reduce the overall amount owed and potentially lower future interest payments. Additionally, seeking advice from a financial advisor can provide clarification on repayment terms and options.

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