Redeeming Your Equity Loan When You Come to Sell

If you bought your home with the aid of a Help to Buy loan, you will currently have this loan secured on your property as a second registered charge.  You will have to repay the loan, together with the first registered charge in favour of the Bank or Building Society, when you sell your property (assuming you haven’t paid it off in full in the meantime). 

Your repayment amount for the Help to Buy loan is calculated as a proportion of either the current market value or the sale price of your property (whichever is higher).  For example, if you received 20% of the initial purchase price of the property through Help to Buy, the amount you will have to pay back (provided you haven't already repaid some of the equity loan) will be 20% of either the current market value or the sale price of your home (whichever is higher). 

You should bear in mind that Help to Buy Agents deal with high levels of applications and are unable to speed up the transaction process.  Therefore, in order to ensure that exchange of Contracts and completion is not delayed by the need to comply with the strict procedures set out in the repayment process, you must take the following steps as early on in the transaction as you can: 

  • You must contact the Help to Buy Agent to inform them of the sale as soon as possible.  They will then provide you with their requirements, together with the relevant forms for completion and return to them.
     
  • You are responsible for obtaining your own valuation – the report submitted to the Help to Buy Agent must be an open market valuation report. 

Before instructing your chosen valuer, you must ensure they are RICS qualified and current members.  Failure to do so, may mean that the Help to Buy Agent is unable to agree to your chosen valuer. 

  • Once the valuation report has been received, you must arrange to forward it to the Help to Buy Agent, together with the relevant form and the administration fee.  The Help to Buy Agent will then provide you with written confirmation as to how much it will cost to redeem your loan and this information should be passed to your Conveyancer as soon as possible. 

Please note that the valuation is only valid for three months.  Therefore, if the loan has not been redeemed within three months, either a re-valuation or an extension will be required. Your valuer may charge for this.  If the figures alter, then so will the redemption amount.

If you have any further queries regarding redemption of equity loans, the following website is most helpful - www.orbitheartofengland.org.uk.  Alternatively, please contact the Conveyancing Department on 01743 285888.

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