What is Help to Buy?
It is a government scheme first introduced in 2013 to help first time buyers get on the property ladder by putting in an equity stake of up to 40% of the purchase price. This meant buyers could put in as little as 5% and borrow the remainder through a mortgage.
Help to Buy has been successful in helping first time buyers get on the property ladder as only a small deposit has been required.
Why would I want to pay it off?
After five years interest is payable on the government’s equity stake in addition to your normal mortgage payment, which will increase your monthly costs.
The equity stake you pay back is based on the value of the property at the time of the repayment, not what the government initially put in. This means if the property increases in value you will not receive all of the increase, the government shares it with you.
You might therefore want to keep all the value increase yourself.
Ok, I want to pay it off. Who do I need to contact?
The administrator of the government’s equity stack is Target HCA.
They can be emailed at [email protected]
Or written to at Target HCA, PO Box 911, Newport, NP20 9PA
How can I pay it off?
There are three ways to pay off the equity loan:
- Using your own money
- When remortgaging the property
- When selling your home
When should I start the process if I’m selling my home?
Start the process when you receive an offer for your property or are close to confirming the sale.
What’s the first thing I should do?
Instruct a surveyor who is a RICS qualified and registered valuer to value your property.
The valuation report should be compliant with Target HCA’s requirements. An experienced surveyor will know what is required.
The valuation will last for three months to allow the process to conclude. If it takes over three months the surveying firm can extend it by up to 4 months by issuing a letter and undertaking a desktop valuation report.
Survey Hut can produce the RICS valuation report. Click here to get more information on how to get a report.
Do I need any other help?
You will need a conveyancing solicitor to help you with the process.
To find a solicitor look at the Law Society website.
Are there any other costs?
An administration fee of £200 is payable to Target HCA.
What else?
An application form will need to be completed.
Find the application form here.
How will I know how much I have to pay back?
You will need to send the administrator the:
- RICS valuation report
- completed application form
- administration fee
- copy of the memorandum of sale from the estate agent, if you are selling your home.
Once the above are received by the administrator a redemption letter will be issued confirming the percentage of equity loan you took out and how much the repayments will be.
How does the process end?
There are a number of legal actions your solicitor and the administrator will need to perform to complete the process.
These include a Legal Undertaking Agreement being drafted by your solicitor, an Authority to Complete form being issued by the administrator to allow the sale or repayment process to complete, payment of the outstanding funds and if you fully repay the equity loan the administrator will apply to the Land Registry to remove the charge on your property.
Still need more information?
Look at the government website for further information.
