The Help to Buy equity loan scheme existed up to 31 March 2023 to assist people buying new-build homes. The scheme meant that buyers could borrow up to 20% of the market value of their property with interest only becoming payable on the loan after five years have passed since the loan was taken out.
Before instructing a solicitor to assist you on the sale of your property subject to a Help to Buy loan, or the redemption of your Help to Buy loan, there are some steps that you need to take.
Steps for you to take
The first thing you need to do is arrange for a RICS surveyor to carry out a valuation of your property. While arranging this valuation report, you should contact Help to Buy and inform them of your intention to repay their equity loan. Help to Buy will provide you with a repayment application form and you will need to complete and return this to them along with payment of their application fee and a copy of the valuation report. The administration fee varies depending on the type of application. If you are selling your property, you must also provide Help to Buy with a copy of the memorandum of sale which your estate agent will provide to you once a sale is agreed.
It is important to note that the RICS valuation report will only be valid for three months from the date it was carried out. This means that your Help to Buy equity loan must be redeemed within this time, or you will need to carry out a further desktop valuation at an extra cost.
You must also advise Help to Buy of the solicitor you have appointed to act for you and provide their contact details. Help to Buy will use these contact details to circulate their redemption pack to your solicitor.
Steps for your solicitor to take
Once you have carried out the above steps and Help to Buy are satisfied with the information you have provided, they will issue your solicitor with a redemption pack. This pack contains a redemption statement, showing the amount owed to redeem your equity loan, and a letter with draft undertakings for your solicitor to use.
Upon receipt of the redemption pack and when your matter is ready to proceed, your solicitor will provide their Letter of Undertaking to Help to Buy which confirms the anticipated completion date for redemption of the equity loan. This undertaking must be sent to Help to Buy with at least 15 working days’ notice of the anticipated completion date. Your solicitor will therefore require the Authority to Complete on file before exchanging contracts on your sale, unless there is gap of at least 15 working days’ between exchange and completion. It is always preferable to obtain the Authority to Complete before exchanging in case of any unforeseen delays with Help to Buy.
Once Help to Buy has reviewed your solicitor’s undertaking, they will issue their Authority to Complete which is valid for the specified anticipated completion date only. If your sale or redemption does not take place on this date, a further undertaking is required from your solicitor, and the 15 working day turnaround time will start again.
Other matters involving Help to Buy
If you are remortgaging your home and do not wish to repay your Help to Buy loan, there are further requirements including a Deed of Postponement that will need to be executed by Help to Buy and your first charge lender. Help to Buy has a deed sealing time of six to eight weeks so it is important to bear this in mind when considering timescales for completing your matter. There are also additional requirements where a property is being transferred subject to a Help to Buy equity loan with parties being added and/or removed from the loan. Again, this will involve documentation being sealed by Help to Buy with the same timescales as mentioned above.
How Michelmores can help
Our Residential Conveyancing team is experienced in acting on Help to Buy redemptions and can handle all of the solicitor steps outlined above. If you need assistance with a sale, remortgage or any other transaction involving a Help to Buy equity loan, please get in touch and we will be happy to help.
