Help to Buy Loan Repayment

09/02/2018
The Help to Buy Equity Loan scheme started in 2013, which means that from 2018 onward there are a number of home owners looking to repay their loan before their 5 year interest free period comes to an end - although the loan itself doesn't have to be repaid for 25 years or until you sell.

There are several ways to finance repaying your Help to Buy equity loan partially (called staircasing) or in full redemption and these include:

  • Remortgaging;
  • Personal savings, a further loan or a gift from family; or
  • Selling you property (you have to redeem your equity loan in full when you sell).

This articles applies if you have an equity loan with HomeBuy Direct, FirstBuy, First Time Buyers Initiative (FTBI), Armed Forces Home Ownership Scheme (AFHOS), Help to Buy and London Wide Initiative (LWI).

What is the Help to Buy Redemption Process?

The process for redeeming (repaying) the full loan and staircasing is similar but we detail the exact process for each below (click to the process you want):


Do you need help with a RICS surveyor or solicitor?

We provide the complete service to repay your Help to Buy Loan including:

  • Target Compliant RICS Property Valuations (nationwide coverage) at competitive prices; and
  • Solicitors to handle the settlement of the equity loan with Target (including remortgaging if required) - either a full redemption or staircasing part of the loan.

You can call us on 0207 112 5388 to run through any questions you have.

* Fixed Fee – Fast Completions - On all Mortgage Lender Panels - Redemption of Help to Buy Loan Specialists


    1
    Process for repaying your loan in full on sale
If you sell the property that the loan is secured over then you will have to repay the loan in full regardless of if the property has gone up or down in value. The loan repayable is calculated as the loan percentage of either the current market value or the agreed sale price (whichever is higher).

Example of the value to repay the loan

Your loan at the outset was 20% of the purchase price of £250,000 then the loan value at that time was £50,000. When you sell you agree a sale price of £300,000 which means the value to repay the loan is 20% of £300,000 which is £60,000.

  • Obtain a RICS valuation for the property. Read the criteria the valuation must meet;
  • Send Target your valuation, solicitor's details and pay your Administration Fee (click to read the Administration Fee applicable);
  • Target confirm in writing if they approve the valuation and how much you need to pay to redeem the loan; and
  • Solicitor handles the rest of the legal work to redeem the equity loan including ID checks, obtaining redemption statement and handling completion.


What are the requirements for the RICS valuation surveyor?

  • The Valuer must be registered with the recognised qualification of RICS;
  • The Valuer must be independent to an estate agent;
  • The report must be on headed paper, signed by the RICS surveyor and addressed to Target HCA;
  • The Valuer MUST provide at least 3 comparable properties and sale prices;
  • The comparables provided must be like for like in terms of property type, size, and age and within a 2 mile radius to the property that is being inspected;
  • The Valuer must not be related or known to you;
  • The Valuer must inspect the interior of the property and provide a full valuation report;
  • Valuations carried out for bank or mortgage purposes are not acceptable; and
  • A copy of the valuation report must be supplied to Target; the inspection date must be shown on the report.

Fixed Fee, No Sale No Fee with a 5 out of 5 rating

 
    2
    Process for repaying your loan in full without selling
This process covers if you don't sell the property, but do settle in full the loan (normally through a remortgage, further loan or personal savings).

  • Obtain a RICS valuation for the property. Read the criteria the valuation must meet;
  • Send Target your valuation, solicitor's details and pay your Administration Fee (click to read the Administration Fee applicable);
  • Target confirm in writing if they approve the valuation and how much you need to pay to redeem the loan; and
  • Solicitor handles the rest of the legal work to redeem the equity loan including ID checks, obtaining redemption statement and handling completion.

    3
    Process for Staircasing to partially repay the loan
This is a partial repayment of your Help to Buy equity loan.

NB For more in-depth information on this topic, please click on Help to Buy Staircasing


Example of the value to repay the loan when staircasing

Your loan at the outset was 20% of the purchase price of £250,000 then the loan value at that time was £50,000. When you staircase you agree a property valuation of £300,000 and to staircase 10% which means the value to repay the loan is 10% of £300,000 which is £30,000.

  • Obtain a RICS valuation for the property. Read the criteria the valuation must meet;
  • Send Target your valuation, solicitor's details, confirm the % your are staircasing and pay your Administration Fee (click to read the Administration Fee applicable);
  • Target confirm in writing if they approve the valuation and how much you need to pay to settle your share of the loan; and
  • Solicitor handles the rest of the legal work to partially redeem the equity loan including ID checks, obtaining redemption statement and handling completion.

What are the requirements to staircase a Help to Buy loan?

  • The minimum amount you can staircase at one time is 10% (of the total market value of the property at the time you staircase);
  • The above requirement means that, when the lenders’ equity in your property is less than 20% you can only repay the loan in full;
  • You may only staircase in multiples of 10%, that is 10%, 20%, 30% etc; and
  • You cannot staircase if there are any arrears of interest payments and/or management fees on your mortgage account. Any arrears must be cleared, before a staircase transaction can proceed.


What are the Administration Charges?

Loan Type

Full Redemption

Staircase

HomeBuy Direct

£250
£250
FirstBuy

£250
£250
First Time Buyers
Initiative (FTBI)

£200
£200
Armed Forces Home
Ownership Scheme
(AFHOS)

£200
£200
Help to Buy

£200
£200
London Wide Initiative (LWI)

£200
£200

How can you contact Target?

You can contact Target regarding your Help to Buy loan repayment in the following ways:

  • Customer Service Team number: 0345 848 0235
  • Email: Target.HCA@targetgroup.com
  • Address: TARGET HCA, PO Box 911, NEWPORT, NP20 9PA



 
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