Redeeming your Help to Buy Loan
1. Redeem: Repaying your loan when selling your property
If you sell the property against which your loan is secured, you will need to repay your loan in full. This is also known as loan redemption.
The repayment amount you will be required to pay is calculated as a proportion (percentage) of either the current market value or the agreed sale price of your home (whichever is higher).
For example, if your loan at outset was 30% of the purchase price, with no part redemptions (staircasing) having taken place, the amount you will have to pay back will be 30% of either the current market value or the agreed sale price of your property (whichever is higher).
Please note: If the product you have is called Home Buy Direct or First Buy, your mortgage account will be made up of an HCA loan and a Developer Lender loan. You will need to repay both loans in equal amounts.
First Steps
Once you have received an offer on your property that you wish to accept, you will need to have the property valued by an independent surveyor. This valuation is used to calculate the amount required to repay (redeem) your loan. It is your responsibility to pay for the valuation.
Valuations must meet certain criteria and these are listed in the customer information pack.
You will need to let Target know in writing when you have instructed the surveyor and the offer amount you have received. Once Target are in receipt of the valuation report they will write to you with details of the next steps.
Target will ask you to confirm the details of the solicitor acting for you in the sale of your property, as they will arrange for the loan to be repaid on legal completion of the sale.
Next Steps
If the property’s valuation is approved, Target will write to let you know the amount required to repay your loan. If the valuation and the sale price differ, the repayment amount will be calculated on the higher of the two. This is in accordance with the terms of the all equity loans.
Fees connected to the sale of your property, such as Estate Agent Fees and Solicitor Fees, are not deducted from the property value. You, as the homeowner, are responsible for paying these fees.
An administration fee is payable for redeeming your loan (see tariff of charges). To avoid delays, we suggest you contact Target to make payment when you forward the valuation report.
What happens if the market value is not enough to repay the loan?
If the market value of your property has fallen, you may find at the time of redemption you are unable to repay the loan in full.
Provided the market valuation you supplied is approved and you have met all the terms of your loan the Lender, will accept a reduced repayment. The amount is calculated by subtracting the outstanding balance on your main mortgage (excluding early redemption penalties) from the sale price or the market value of your property (whichever is higher). Target will liaise directly with your solicitor to ensure the correct amount is repaid.
If there are any arrears of interest payments and/or management fees on your mortgage account, there is no obligation on the lenders to accept a reduced repayment. You will still be required to repay the loan and arrears in full.
2. Redeem: Repaying your loan without selling your property
a. Full redemption (without another loan being secured on your property)
In this scenario you will be looking to repay (redeem) your loan in full without taking out another loan secured on your property.
Please note: If the product you have is called HomeBuy Direct or FirstBuy, your mortgage account will be made up of an HCA loan and a Developer Lender loan. You will need to repay both loans in equal amounts.
First Steps
You will need to have the property valued by an independent surveyor. This valuation is used to calculate the amount required to either repay your loan in full or staircase your loan as per your request. It is your responsibility to pay for the valuation.
Valuations must meet certain criteria and these are listed in the customer information pack.
You will need to send the valuation report to Target as soon as possible after you have received it. You will also need to let Target know the details of the solicitor you are using for this transaction.
Next Steps
If the property’s valuation is approved, Target will write to let you know the amount required to repay your loan. From this point on Target will liaise with your solicitor so that once payment has been received the legal paperwork is completed.
An administration fee is payable for fully redeeming your loan (see tariff of charges). To avoid delays, Target suggest you contact them to make payment when you forward the valuation report.
b. Full redemption (by securing another loan on your property)
In this scenario you will be looking to repay (redeem) your loan in full by taking out another loan secured on your property with another lender.
Please note: If the product you have is called Home Buy Direct or First Buy, your mortgage account will be made up of an HCA loan and a Developer Lender loan. You will need to repay both loans in equal amounts.
First Steps
You will need to have the property valued by an independent surveyor. This valuation is used to calculate the amount required to repay your loan in full. It is your responsibility to pay for the valuation.
Valuations must meet certain criteria and these are listed in the customer information pack.
You will need to send the valuation report to Target as soon as possible after you have received it. You will also need to let Target know the details of the solicitor you are using for this transaction.
Next Steps
If the property’s valuation is approved, Target will write to let you know the amount required to repay your loan. From this point on Target will liaise with your solicitor.
An administration fee is payable for fully redeeming your loan (see tariff of charges). To avoid delays, we suggest you contact Target to make payment when you forward the valuation report.