I used Help to buy and it was a big mistake – how do I get out?

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I want to get rid of the 40 percent interest of the government in my house. I bought my home in Richmond through the Help to Buy scheme in March 2019 when it was valued at £499,000.

At first, I was excited to get up the real estate ladder for the first time, making the initial cost of my mortgage more affordable. I have about a year left before I start paying interest on the 40 percent loan I got from the government, but with both interest rates and inflation rising rapidly, I’m worried about how much this will cost me in the end.

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I would rather get rid of the government assets in my house completely. Is this even possible, and if so, is it wise?

– GL, 27, London

Geoff Garrett, Director at Henry Dannell, Financial Advisor

Yes, the 40pc element can be refunded at any time. You do not have to wait for the house to be sold, because there are no early repayment costs. But as always, there are a few points to consider before doing this.

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First, when paying off the loan in whole or in part, you must pay a minimum of 10 percent of the value of the property. This will be based on the current market value rather than the original purchase price.

If you’re taking out a mortgage to repay this, it’s important to note that some lenders won’t lend for a partial repayment of Help to Buy and the full 40% must be repaid – or 20% if you lived outside London.

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This present value would need to be validated by a qualified Royal Institution chartered surveyor at a cost. There is also a £200 administration fee required when making a full or partial refund.

While Help to Buy will have the property appraised by a surveyor, the lender will also perform a separate appraisal if you take out a mortgage to repay the loan. The current market value of the property is an essential aspect that is often overlooked as it also determines the sum of the outstanding loan.