Do You Require Help to Pay Off Your Help to Buy Loan?

Residential Property Solicitors Newcastle and Sunderland

Help... I need to repay my Help to Buy Equity Loan as time is running out!

Over the last few years, our conveyancing team have helped hundreds of clients to purchase properties using the Help to Buy Scheme. For many, the original government contribution, which was a loan for a period of five years, now needs to be repaid. The schemes can be quite complicated, with clients often confused as to what they should do next. We, therefore, thought that we would put together this helpful guide.

As a reminder, the equity loan is the Government’s incentive to assist First Time Buyers purchase their first property. This is often a 20% Government contribution, which is not repaid until five years after completion (so sometimes before). (There are other rules and regulations to this type of assistance, so please do get financial advice before you proceed).

It is often the case that people forget all about the equity loan after they have purchased their dream home. It then suddenly creeps up on them.

You can redeem the equity loan, the loan from the Government, in 3 ways;

1. By redeeming the equity charge with cash which you have saved up over the years;
2. By remortgaging the property to repay the equity loan and your current loan; or
3. By releasing equity from your current mortgage (often called further borrowing) using your current lender.

In all three cases, you will need a solicitor to help you.

Option 2 above is effectively a remortgage and a redemption of your current mortgage all at once. Legally speaking, it is the most complicated of the three options above as we need to seek redemption statements, deal with both your existing lender and your new lender, and also Target (the Governments body that deals with these Equity Mortgages after completion). However, for you, it may well work out to be the cheapest ongoing option. Your financial circumstances are likely to have changed since you took out the original loans. You may now be able to access a better mortgage deal that suits your needs. We reiterate here that financial advice should be sought on what is best for you.

Option 3 above means that you will be asking your current lender to increase your mortgage with them in order to pay off the government loan.

Many people living on new-build estates will have Help to Buy mortgages and will now need assistance to pay them back. At Emmersons, our conveyancing solicitors are used to dealing with these mortgages as so many of our clients have them. The schemes are often complex and mind-boggling to the layperson but not to us.

When making one of the three decision to repay the mortgages, clients often become stuck as they do not know what they actually need to do to begin the process.

In order for you to redeem the government loan, you need to have an independent valuation undertaken as Target will request this. We can point you in the right direction to get this done. You will then need to pay their fees. Once all this is complete, Target will release their redemption pack to your solicitor so they can process the same and process the matter to completion.

If you need help with this process or any advice contact us.

Residential Property Solicitors Newcastle:  0191 284 6989

Residential Property Solicitors Sunderland: 0191 567 6667

Email us: enquiries@emmersons-solicitors.co.uk

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