Help to Buy  

Hanley offers way out for first Help to Buy cohort

Hanley offers way out for first Help to Buy cohort

Hanley Building Society is the latest lender to launch a remortgage deal aimed at those graduating from the Help to Buy equity loan scheme.

The scheme, which offered first-time buyers the chance to take a five-year interest free loan from the government on up to 20 per cent of their property, is approaching its five-year anniversary.

In the coming months borrowers on the scheme must either choose to pay fees on the government loan, or remortgage altogether.

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Fees on the loan are charged at 1.75 per cent and rise in line with the retail price index.

The Hanley deal has an initial two-year discounted pay rate of 1.94 per cent and offers Help to Buy borrowers a remortgage option to remove the equity element of the loan and effectively take ownership of the whole property.

The product includes a £1,000 cashback to help counter higher legal costs generated and a free valuation. There are no additional fees and no credit scoring. The minimum loan amount is £30,000, with a maximum of £500,000.

The product follows comments from thinktank The Resolution Foundation, which said that the loans were a “timebomb” with people who took out Help to Buy facing fees that they can ill afford and insufficient options to remortgage.

However, Ray Boulger, from John Charcol, said that although remortgage deals are available, in some cases Help to Buy borrowers should look at whether it is a good idea to keep the loan and pay the fees.

“Although you pay interest, it is very low,” he said. “If you think prices are going to stagnate in the coming years it may not be worth paying off the loan.”

David Lownds, head of marketing and business development at Hanley Building Society, said:“Although switching from this scheme may not be the right decision for all Help to Buy borrowers, it’s encouraging that a small - but growing - number of options are becoming available to meet their remortgaging needs.

"And opportunities will continue to emerge for proactive intermediaries within this space."