Repaying your Help to Buy Equity Loan
Help to Buy was first introduced by the Government in 2013 with many people taking advantage of this scheme in order to get a foot on the first rung of the property ladder.
Once the equity loan reaches five years old interest starts becoming payable. Many people have already started to look into and take action to repay the loan before any interest becomes due. Some people will now be some three years into their loan and may be thinking that it is time to look at ways of repaying the debt.
If you have a Help to Buy equity loan you are able to repay this at any point after the date of completion of your purchase. You do not need to sell the property to repay the loan, you can repay it either by remortgaging the property or if you have other sufficient funds to do so. The Help to Buy equity loan will be repayable at the current market value of your property and an independent Royal Institute of Chartered Surveyors (RICS) surveyor would need to be instructed to provide a valuation of your home. Upon receipt of the valuation report from you, the organisation with which your Help to Buy Equity Loan is held will then use this information to calculate the value of the loan and will provide the figure required to repay the equity loan. This will need to be done within 5 working days of the date of the valuation. You will be responsible for the valuation fee and the valuation is valid for a period of three months.
As the valuation is only valid for a period of three months it is a good idea to have everything in place either prior to instructing a surveyor or as soon as possible after doing so. This is especially important where you are looking to remortgage your property as this will involve a new mortgage process and this can sometimes take a while for the paperwork to be issued from the lender. If the original valuation expires, a new one will need to be obtained and this will result in further fees.
One of the most important things to have in hand is to instruct a solicitor. Once the value of the loan has been calculated this will be sent to your solicitor and this can take up to four weeks to be issued. The sooner you are able to provide details of your solicitor to the Help to Buy organisation the less chance there will be of delays.
You may be wondering why you would need a solicitor. Even if you are not remortgaging your property you will still need to instruct a solicitor. Your solicitor will liaise with Help to Buy and will ensure that all necessary paperwork has been issued and that the content is correct. They will also be responsible for sending the funds to repay the equity loan and obtaining a sealed legal discharge, which proves that the loan has been repaid. This legal discharge is then sent to the Land Registry so that the equity loan is removed from your title deeds. If you are remortgaging your property then your solicitor will also assist you with this process from start to finish.
Coffin Mew have already helped new and existing clients to repay their equity loans.
If you are thinking of repaying your equity loan or, if you have any queries surrounding making a repayment, please contact a member of our Residential Property team to discuss your requirements further.