Remortgaging to pay off a Help to Buy equity loan in full means increasing your main mortgage borrowing to cover the amount your administrator confirms is owed, based on a current valuation of your home. A lender assesses the higher loan the same way as any other extra borrowing, so your income, equity and credit history are all looked at against the new, larger amount, not just your existing mortgage.
This page goes further than our main Help to Buy remortgage with bad credit page on the detail of repaying the loan itself: the order of steps, what a redemption statement shows, and how bad credit is weighed against a bigger loan.
On this page
This page covers
- Reason for remortgaging
- Raising moneyBorrowing more increases your loan to value, which can change the options available.
Read the main guide: Remortgaging with a Help to Buy equity loan and bad credit
In short
- Repaying the loan in full means borrowing enough to cover its percentage share of your home’s current market value.
- A redemption statement from your administrator, based on a valuation, sets the exact amount owed.
- The new, larger mortgage is assessed for affordability like any other borrowing, with your credit history weighed against it.
- Repaying in full removes the equity loan complication, which can open up more lenders once the mortgage completes.
Your home may be repossessed if you do not keep up repayments on your mortgage. Think carefully before securing other debts against your home. Borrowing over a longer term can mean paying back more in total.
What does repaying the equity loan in full involve?
To repay the loan in full, you need a redemption statement from your Help to Buy administrator, which sets out the exact amount owed based on a RICS valuation of your home at the time. Because the loan is a percentage share of value rather than a fixed sum, the amount can be higher or lower than when you first took it out, depending on how house prices have moved.
| Step | What happens |
|---|---|
| Get a valuation | Usually a RICS valuation, arranged through your administrator, sets the current market value |
| Get a redemption statement | Your administrator confirms the amount owed, based on the loan’s percentage share of that value |
| Arrange the extra borrowing | Your remortgage is sized to cover your existing mortgage plus the redemption amount |
| Complete | The remortgage completes and your administrator’s charge is removed from the property |
General description only. Timescales and exact steps can vary by administrator and lender.
How is the extra borrowing assessed?
The redemption amount is added to your existing mortgage balance, and the lender assesses the whole new amount for affordability, in the same way as any other extra borrowing. This usually means a fresh look at your income, outgoings and a stress test against a higher rate, not simply carrying over your existing mortgage terms.
Because the new loan is larger, your loan to value rises. Our guide on how LTV affects a bad credit remortgage explains why a higher LTV, on top of adverse credit, can narrow lender choice further.
How does bad credit affect repaying a Help to Buy loan this way?
Your credit history is assessed the same way as on any raise-capital remortgage: how recent and serious the problems are, whether they are settled, and how they sit alongside the higher amount you need to borrow. See our pages on remortgaging with a CCJ and defaults for how each is generally weighed.
Once the equity loan is repaid in full, the administrator’s charge and its involvement end, so your new mortgage is assessed like any standard remortgage from that point on, without the Help to Buy complication. Some homeowners find this widens their choice of lender compared with keeping the equity loan in place.
Raising a larger mortgage to repay the equity loan increases what is secured against your home and, over a longer term, can mean paying more in total. If money is tight, free advice from StepChange or National Debtline can help you weigh this up before committing.
When is the right time to repay the loan in full?
Many homeowners consider repaying around year 5, since an interest fee starts from year 6 and typically rises each year after that. Repaying earlier avoids the fee altogether, but it also means borrowing more sooner, which affects your monthly payment and your loan to value straight away. There is no single right time, and it depends on your equity, income and what else you need to consider.
If you are not ready to repay the whole loan, partial staircasing is a separate route worth asking your administrator about, and it can sometimes be combined with a smaller remortgage.
What if the extra borrowing is not affordable?
If the full redemption amount cannot be raised affordably, options include repaying only part of the loan through partial staircasing, waiting until your credit history or income position improves, or exploring a product transfer that keeps the equity loan in place for now.
- Ask your administrator for an up-to-date redemption statement, even if you are not ready to act, so you know the figures
- Get your credit reports from Experian, Equifax and TransUnion before applying
- Speak to a broker experienced with Help to Buy cases and adverse credit
- Get free advice from MoneyHelper if the extra borrowing would stretch your budget
What may affect repaying a Help to Buy loan through a remortgage
| Factor | Why it matters |
|---|---|
| Current property valuation | Sets the redemption amount, since the loan is a percentage share of value, not a fixed sum. |
| Size of the extra borrowing needed | Added to your existing mortgage, the whole new amount is assessed for affordability. |
| Resulting loan to value | Borrowing more to repay the loan pushes the LTV up, which can narrow lender choice. |
| Type and age of credit issues | Recent or unresolved problems are weighed against the larger amount you need to borrow. |
| Timing versus the interest fee | Repaying before year 6 avoids the fee, but means borrowing sooner. |
| Income and affordability | Lenders check income and outgoings and stress test the new, larger payment. |
| Administrator agreement and timescale | A redemption statement and administrator sign-off are needed before completion. |
| Alternative of partial staircasing | Repaying only part of the loan needs less extra borrowing. |
These are general points, not lender rules. Each lender sets and changes its own criteria.
Information an adviser may ask for
You don’t need all of this to make an enquiry. It helps to know where to find it, because an adviser is likely to ask about most of it.
- A recent or requested redemption statement from your Help to Buy administrator
- Details of any RICS valuation already arranged
- Your existing mortgage balance, deal end date and any early repayment charges
- Your credit reports from Experian, Equifax and TransUnion
- Details of any CCJs, defaults, missed payments or arrears, with dates
- Proof of income and a summary of your regular outgoings
Frequently asked questions
How much do I need to borrow to repay my Help to Buy loan?
The amount is based on the equity loan’s percentage share of your home’s current market value, confirmed in a redemption statement from your administrator after a valuation. It is not the amount you originally borrowed, and it moves with house prices.
Does repaying the loan in full make it easier to remortgage with bad credit?
It can help once the loan is repaid and the administrator’s charge is removed, because your new mortgage is then assessed without the Help to Buy complication. Getting to that point still means passing affordability on the larger amount, with your credit history assessed against it.
Is it better to repay in full or stagger the repayment through staircasing?
It depends on your equity, income and how the interest fee timing suits you. Repaying in full removes the equity loan entirely but needs more borrowing at once. Partial staircasing needs less extra borrowing but leaves some of the loan, and the fee, in place.
Will a valuation always show enough equity to repay the loan?
Not always. If house prices have fallen, the redemption amount may be lower than expected, but your available equity for the extra borrowing may also be tighter. Get a current valuation before assuming either way.
Can I repay the loan if my credit score is low?
It may be possible. Lenders assess the whole file, not a headline score, alongside the larger amount you need to borrow. A lower loan to value after repayment, and older or settled credit issues, can both help widen the options.