During your Help to Buy loan period you can choose to repay at any time. The most common time to repay is prior to the fifth anniversary date on which the loan was taken out, as this is when interest is implied. Interest payments start at 1.75% increasing yearly in line with inflation.
The most common methods for redemption are either the loan will be simultaneously redeemed with the sale of your Property, or, by a voluntary redemption.
When redeeming your Help to Buy Loan you can choose to either repay in full or in part by staircasing. Staircasing your loan allows you to repay a percentage, the minimum being 10%, with the remainder of the loan being paid at a later date. Homes and Communities Agency (Target) will note your partial repayment on their systems, however, the title register to your Property will remain unaltered. Only once your loan is redeemed in full to Homes and Communities Agency remove their charge.
Funding your Help to Buy Loan
When redeeming your Help to Buy Loan you can either choose to fund the repayment by way of a mortgage, either with a new lender, or a further advance from your existing lender. You will be responsible for obtaining your new mortgage offer which should be provided to your Solicitor as soon as possible.
You can fund your repayment using your savings, in which case you will need to provide your Solicitor with proof of funds in order for them to check that the necessary funds are available.
What you need to do
In order to start the redemption process, you will need to arrange for a RICS Surveyor to carry out a Property valuation. The below link can be used in order to identify a RICS Charters Surveyor:
Once a valuation has been carried out, and you have received a copy of the same you will need to send this to Homes and Communities Agency, along with the completed Form A Form (for a house sale) or a Form B (for redemption without a sale), and make payment of their admin fee totalling £200.00. You can email the valuation and relevant form to Homes and Communities Agency using the email address below:
Once Homes and Communities Agency have received all the required documentation from you, they will send a redemption quote to your appointed solicitor.
The valuation is valid for a period of three months from the date it was carried out. If you are unable to redeem your loan within this timeframe then Homes and Communities Agency may carry out a desktop valuation which is valid for a further three months. You must complete your redemption within six months of the initial valuation.
Next Steps
Once your Solicitor has received the redemption quotation from Homes and Communities Agency they will complete and return the letter of undertaking to Homes and Communities Agency 15 working days prior to the expected completion date.
Homes and Communities Agency will then issue the Authority to Complete to your Solicitor, usually within 5 working days of receipt of the undertaking. Once this has been received your Solicitor can proceed to completion.
How we can help
For further advise about your Help to Buy loan please contact our dedicated Residential Property team at Herrington Carmichael who will be happy to help.
This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to a particular matter.
