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FEATURE


LEGAL SERVICES


Redeeming a help to buy equity loan


By Aaron Bailey (pictured), Conveyancer at Robert Barber Solicitors


The Help to Buy (HTB) Scheme has now been extended until 2023 and, with the HTB Scheme now also open to non-first-time buyers who are purchasing a new build property, its popularity looks set to continue. People have taken on a HTB Equity Loan to help


them purchase a property since the scheme began in April 2013. We are now seeing an increase in people intending to redeem those loans when moving to a new property and while people understand the process of obtaining the loan when purchasing a property, they do not often know the process involved with redeeming it later.


HOW TO REDEEM A HTB CHARGE There are three ways to redeem a HTB charge: Sale: If you choose to sell your home you can redeem the HTB charge as part of the process. You should tell your estate agent and legal representative as soon as possible, as there are extra steps to take as part of this process and you will usually incur legal fees for the additional work involved. Staircasing: You can use staircasing to increase the


equity owned in your home. HTB will usually own a 20% equity share, staircasing can be used to decrease the amount HTB own and increase your equity until you own 100%. The minimum equity you can staircase is ten per cent if there are no arrears on your account - however, because HTB loans work differently from normal mortgage products, you should seek financial advice on the best options for your specific needs before proceeding. Remortgage your home: You could remortgage with


your mortgage provider or an alternative provider if you are able to borrow a suitable amount to repay the existing mortgage and HTB Equity Loan. This means you can stay in your property if you wish to live there longer than the initial HTB five-year interest free period.


WHAT IS INVOLVED? These methods involve paying an administrative fee to your HTB provider and are subject to you obtaining an RICS Valuation Report. If HTB approve the valuation, they will issue a figure for redemption/staircasing. You will have a three-month period where the


valuation and figure remain valid. If this period expires another valuation will be required at your own cost, but you can obtain a desktop valuation provided it meets the HTB Scheme criteria.


72 business network April 2020 It is particularly important to note these timescales


with house sales take an average of 12 weeks, but can be longer if long chains or leasehold properties are involved.


What you need to do: • Obtain a RICS valuation for the property • Send the target your valuation and legal representative’s details and pay the administration fee


• Target will confirm in writing if they approve the valuation and provide a redemption figure


• Legal representative deals with the rest of the legal work and redemption of the equity loan, including obtaining a redemption statement, providing an undertaking to target, and obtaining authority to proceed to exchange/and or completion.


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