What are the remortgaging options if your property value hasn't increased?
If house prices haven’t gone up over the five years and your property’s value has stayed the same, one option is to remortgage at a higher loan-to-value (LTV) to pay off your Help to Buy equity loan.
Even if property prices haven’t increased, keeping up with your mortgage repayments means you’ll have reduced your mortgage and built up equity in your home.
To pay off your equity loan, you’d need to increase your mortgage, which might mean higher monthly repayments. The benefit of doing this is once the equity loan is repaid, any future increase in your home’s value will be yours to keep.
Remember, the Help to Buy equity loan is based on a percentage of your home’s value, so if property prices go up, the amount you owe increases too. Clearing this loan by borrowing more on your mortgage means that any future growth in value belongs to you alone. That said, it’s not always simple, as the maximum LTV varies by lender.
What are the remortgaging options if you're in negative equity?
If your house has dropped significantly in value, your options may be limited, and you won’t be able to borrow more. This means that if you sold your home, it wouldn’t cover the balance left on your mortgage.
In this situation, your best option may be to stay on the standard variable rate (SVR) and wait until property prices go back up.
In the situation where your property value has not increased, or you are in negative equity we’d recommend speaking to a mortgage broker to see what is the best course of action for you.