Post Completion Quick Guide

October 2019
The Help to Buy scheme can be a little bit confusing at times, especially when it comes to thinking about paying back the loan or moving house when you've used the scheme. Check out our quick guide for some more information about what happens post-completion. 


 

Paying back your loan

Once you have completed your purchase and have moved into your property, you will have 25 years to pay back your equity loan. The first five years are interest free, so if you pay back the loan within this time, you will not have to pay any interest on your loan. The only monthly fee in these five years will be the administration fee of £1 a month, charged by the post-sales agent,Target. Interest will be charged in year 6 and onwards until the loan is repaid. In Year 6, you will be charged an interest rate of 1.75%. This rate steadily increases year on year in line with any rise in the Retail Price Index plus 1%.

The interest does not reduce the equity loan amount left to pay. 


The repayment figure will be based on your property's current market value. You will therefore need to have your property valuated by a RICS certified surveyor before repaying your loan. 

The equity loan can only be paid back in lump sums. If you took out 20%, the loan can be repaid in two 10% installments or one 20% installment. If you took out a lesser percentage, this must be paid back in one lump sum payment. 

 

Remortgaging

It is possible to remortgage your property and add the equity loan to your new mortgage, rather than paying back your equity loan in a lump sum payment. The mortgage term with the new lender must not exceed the unexpired term of your existing mortgage. For example, if remortgaging a 25 year mortgage five years into the term, the new mortgage should not exceed 20 years.

You will need to contact the post sales agent, Target, in the first instance if you wish to proceed with this route. We also recommend speaking to a financial adviser.

 

Moving home and using Help to Buy again

You will be able to use Help to Buy even if you have already bought a house through the scheme. However, your existing Help to Buy property will need to be sold and your equity loan redeemed and paid off in full. Loans cannot be transferred from one property to another. 

Once again you will need to have your property valued by a RICS certified surveyor in order to obtain the value of the repayment figure. 

 

Subletting

Typically, you will not be permitted to sublet your home. The Help to Buy scheme is designed for those who need help getting onto the property ladder and the properties are sold under the agreement that they will be used as the buyer's main residence. 

However, there are certain circumstances that may mean that permission to sublet will be granted:
  • The homeowner has been temporarily relocated by their current employer and is not receiving sufficient payments to pay for their mortgage and the housing costs associated with temporary relocation.
  • The homeowner has a medical condition that means they are unable to remain in their property for a temporary period of time.
  • The homeowner must temporarily relocate to look after an ill family member.
You will need to speak with Target before subletting your home. To sublet without permission will mean you are in breach of your contract. 


Home Improvements

You will need to seek permission from Target for any significant structural changes you wish to make to your property. Some renovations will not be permitted. Redecorating, kitchen/bathroom re-fitting, solar panel installation or window replacements are not considered home improvements and are permitted without approval.

 

Important note: 

Help to Buy NEYH are the pre-sales agent for the Help to Buy scheme, meaning that once you have completed, we no longer handle your case or deal with the repayment process. The post-sales agent, Target, will be your contact when you are ready to repay your loan, want to remortgage or wish to ask for permission for improvements. A range of resources are available on their website and their Customer Information Pack can be found here. If you wish to speak to them directly, their number is 0345 848 0235.