In 2013, the Government created the Help to Buy Equity Loan scheme to assist first time buyers and homeowners buy a property. Under the scheme, the Government lends up to 20% of the cost of your newly built home, so you’ll only need a 5% cash deposit and a 75% mortgage to make up the rest.
The loan attracts an interest free period for five years following which interest on the loan is payable, so those of you who bought with a Help to Buy Scheme Equity Loan when it first started, may want to redeem all or part of it before interest kicks in. We can help you with this.
What do you need to do?
1. Obtain a valuation
In order to produce a redemption figure for redeeming your loan, you will need to provide Target (the agents for Help to Buy) a valuation for your property that has been conducted by a RICS (Royal Institute of Chartered Surveyors) Certified Surveyor. The valuation will only be valid for 3 months. If your redemption is not completed within 3 months of this date, you will need to provide a desktop valuation, re-confirming your property value. You must complete your transaction within a maximum of 6 months of the original valuation. If you are redeeming and selling your property, the figure used to calculate your redemption will be the figure provided in the RICS valuation report or the Sale Price (the higher of the two).
2. Instruct a solicitor
You must instruct a solicitor to undertake the required legalities. The property law team at Emery Johnson Astills appreciate that you have countless practical considerations including pressing timescales and with our wealth of knowledge we will ensure the transaction is simple and straightforward. We will liaise with Target to ensure the correct paperwork is completed, send the money to Target and make sure that the charge has been removed at the Land Registry.
3. Initiate the redemption process
You must complete the loan redemption form and return this form to Target and pay the administration fee. If you are selling your house it is your responsibility to clear any outstanding interest payments prior to completion, completion will not be granted until this is done, or an interest payment shortfall agreement is in place. Where you are redeeming your equity loan without selling your property, you will need to clear all arears prior to beginning the process.
4. Redemption Letter
Once Target receives your loan redemption form, fee, and valuation they will produce a redemption letter. This will be sent to yourself and your solicitor. Your solicitor will also receive a guidance pack and a copy of the required form of legal undertaking to be submitted at least 15 business days prior to completion.
The redemption letter will include your estimated repayment figure based on the valuation. If you are redeeming through a house sale the redemption letter will include any arrears to be cleared.
5. Ready to Complete
Your solicitor will provide a legal promise to Target 15 working days prior to the expected completion date. If the completion date stated on the legal promise does not take place and is delayed more than one week a new legal promise is required and a new redemption figure confirmed.
Where there are not sufficient funds to settle the interest payment you must engage with the relevant agency and either agree a payment to cover the shortfall or enter into an interest payment shortfall agreement. The agency will not grant authority to complete until all monies due to the agency have either been settled or agreement reached on clearing the sum after completion.
On the completion date, your solicitor is responsible for sending through the correct redemption money to the relevant agency. Once the money has been received, you will either receive a memorandum of stair-casing confirming the remaining equity mortgage percentage or official copies showing the charge has been removed.
Our Emery Johnson Astills Conveyancing Team in Leicester and Loughborough are happy to assist with any help to buy redemptions.
If you require assistance or further information, please contact our Emery Johnson Astills Conveyancing Team on 0116 2554 855 (Leicester) or 01509 610 312 (Loughborough).