Has anyone who used Help to Buy bought out the loan?

[dirtychinchilla]

We bought our house just under two years ago under the help to buy scheme. The government agency, Target, currently owns 20% of the house. Obviously we'd like to take full ownership of the house, so we're looking at remortgaging now - bearing in mind increased salaries over the last 2-3 years since the last mortgage application was done - in order to buy them out.

We've had to get an independent valuation done by a chartered surveyor, which we've done. Now we have to send this off to the agency, Target. I think they evaluate what's been sent over and, in tandem with us securing the right size mortgage, they get the loan paid off. Unfortunately they take a fee for this, but it has to be done.

I have a question to anyone that's done this, though. We have made improvements to the house. We've redone the garden, put down wooden floors, tiled, and installed shutters in all the windows. These are obviously our own home improvements. My father in law was on a similar scheme years ago and is convinced that these can be deducted from the overall cost of the house - anyone know anything about this?

Edit: Just found this on their website actually - I think it answers my question:

Can I extend or alter the property?
Not without permission. Because Help to Buy is designed to help people move on to or up the housing ladder, you should consider repaying part or all of the Homes and Communities Agency’s contribution before making plans for improvements or alterations. This is because the Agency is seeking to help future aspiring buyers and may use the proceeds of these repayments to make more assistance available. Therefore, consent will not usually be granted for significant home improvements. The Post Sales Help to Buy Agent will act reasonably in considering any application and will review cases of hardship if, for example, property modifications are required for a disability.

When your property is sold in the future, if improvements have been made with the approval of the Post Sales Help to Buy Agent, these will be ignored when your property is valued to work out how much should be repaid to the Agency.

Next step is to get a solicitor, so if anyone has any recommendations for conveyancing (if we're allowed to ask?) then I'd appreciate it. We had a terrible sort of lawyer agency when we bought the house as the company that we bought it from, Kier Living, illegally forced us to use them.

Slightly longer term plan is to get the full value of the house as a mortgage and use the capital to buy another, smaller, property up north to rent out.

 

[Abyss]

Out of interest why are you looking to pay of the 20% before the end of the 5 year interest free period using a loan with an attached interest rate? I get that potentially the 20% could go up if the house value goes up, but equally in that time it will mean your LTV will be stronger when you re-mortgage.

In your position I'd be riding out the 5 year interest free period then lining up a re-mortgage to pay off the 20% at that point as opposed to paying of an interest free loan with one that incurs interest.

 

[Abyss]

The government agency, Target, currently owns 20% of the house. Obviously we'd like to take full ownership of the house

Are you on the normal help to buy shared equity loan scheme?

If so Target don't own 20% of your house. It is shared equity not shared ownership, therefore Target no more own 20% than your mortgage company own the rest. You are in no stronger or weaker position from an ownership point of view whether the loan is with Target or transferred to a mortgage company. It sounds to me like you've got in your head that the 20% help to buy loan some how means you don't own your own home, yet by that same logic you can say the same about the mortgage loan you have.

There will be a first charge on your property to your mortgage company, and a second charge to Target. You own the home.

I'd recommend running some numbers and scenarios based on house price values to understand when you are best to re-mortgage.

We are buying a house and my current intention is to:

• Take the help to buy at 20%
• Pay the mortgage each month but also put away in savings the amount we would otherwise have been paying if the mortgage had included the 20% help to buy amount
  
• Remortgage after 5 years when the interest free period ceases

The risk of this scenario is that if house prices go up in 5 years the help to buy figure will go up, but in likelihood given a new build usually devalues in the first 2-3 years I'm working on the assumption the property will be worth similar money after 5 years.

 

[Mercenary Keyboard Warrior]

Help to buy significantly limits mortgage options though, assuming he was on a 2 year fix then as thats coming to an end he will have the option of moving to a more "normal" product if he can get rid of the 20%.
New build depreciate the minute they are no longer new so they have already taken the hit to values.

Its always worth running the numbers of course, but Help to buy is restrictive so its a good idea to get shot of it when he can, assuming he can get a good mortgage deal, which isn't certain as he will be pretty high ratio of borrowings unless house price has rocketed.

 

[dirtychinchilla]

The reason why we want to get out of the help to buy scheme is that we want to purchase a second property as soon as possible. Help to Buy prevents you owning a second property, and I wouldn't have enough cash to do it anyway, so we're remortgaging in order to get that rid of that noose and start to get a property portfolio going.

So that's also why we aren't waiting for 5 years. Our house has also appreciated in value by quite a bit, and I don't really want to be giving that away.

I also don't have the mentality that you mentioned, @Abyss, of wanting to have full ownership of the house. I'm not that fussed - I live there and it's mine - but I do want to have the freedom to do as I wish with my money. For example, you can't sublet rooms legally. I don't want to, but I'd like to have the option. You also have to seek permission to modify your home.

 

[Spammeh]

We've just remortgaged 2yrs into the 5yr HTB loan. Couple of reasons why: firstly, the number of mortgages open to home owners that use the HTB scheme are limited, and you don't necessarily get the lowest rates. Secondly, our house had risen in value by £50k in the 2yrs, which meant an additional £10k to pay off the loan. Thankfully we'd saved up enough to pay off some of it, and remortgaged for the additional. The valuation meant that our LTV stayed pretty static and a larger number of mortgage products were open to us. Perfect scenario. The 'admin' fees to Target and what not weren't great, nor was the cost of a RIBA valuation on top of solicitors etc, but we got it done within a couple of months without any hitches and we're now in a much better place imho