How to repay your equity loan when you sell your home
The process you need to follow to repay your Help to Buy: Equity Loan when you decide to sell your home.
Making changes to your equity loan or mortgage
Before you make any changes to your equity loan or repayment mortgage, you need to understand how those changes may affect you. You should think about getting independent financial advice.
If you’re paying monthly interest or management fees, you should keep making these payments.
You’ll need to settle any outstanding payments in full, or set up a payment plan with us, before we can continue with your request.
How we work out what you need to repay
We work out the total amount of equity loan you repay from the market value of your property at the time you decide to sell.
This value is set by either a Royal Institution of Chartered Surveyors (RICS) valuation, or the sales price (whichever is the highest).
The total amount includes interest, fees and any other payments you still owe (arrears).
You’ll need to repay these in full before the completion date. If you do not, the house sale might be affected.
If you’re paying monthly interest and management fees, you must continue to pay these until your account is settled.
When you’ve received an offer on your property, or are close to confirming the house sale, you need to follow these steps.
1. Get a surveyor’s valuation report
Before you contact a surveyor, you must tell us about anything that may affect the value of your home, as we may need to agree which RICS surveyor you can use.
This can be things like:
- external cladding
- any breaches of planning permission
- building regulations which have an impact on your property’s value (for example, a conservatory which does not have a building control certificate)
How the report should be made
You’ll need to:
- send us a RICS valuation report for your property, so we can work out how much you need to repay
- pay for the report yourself
The report must be:
- signed and dated by the certified RICS surveyor who made the survey. Find a RICS surveyor in your area.
- on headed paper addressed to Homes England, and as a PDF file or a digital document that you cannot edit
We cannot accept valuations that are made for bank or mortgage purposes.
Our criteria for the surveyor
You should give the surveyor making the valuation a copy of these criteria.
They must:
- be both RICS qualified and registered
- be independent of any estate agent
- not be related or known to you
- inspect the inside of the property
- provide at least 3 comparable properties and sale prices.
These properties must be like-for-like in type, size and age, and within 2 miles of the property that is being inspected.
The report is valid for 3 months from the date it was produced. You must send us the report within 5 working days of the date it was issued.
Post:
Target HCA, PO Box 911, Newport NP20 9PA
If the report expires before your property sale completes
If your application has not completed after the 3 months, you must get a letter from RICS confirming the valuation can be extended for another month.
This letter must be:
- from the same RICS surveyor that made the valuation
- provided on the company’s headed paper, and as a PDF or a digital document that you cannot edit
If the repayment process does not complete in the additional month, you’ll need to provide a ‘desktop valuation’ report.
This is where the RICS firm who did the original valuation supply a valuation report without visiting the property in person.
Getting a desktop valuation
Our criteria for the surveyor are that they must:
- refer to the original valuation report
- confirm the updated report is a desktop valuation
- be a surveyor from the same company as the first inspection
- provide at least 6 comparable properties and sale prices from the last year if the property has increased or decreased in value. If 6 are not available, they must state this clearly.
The report must be:
- made within 2 weeks of the expiry date of the original valuation report
- completed, signed and dated by the same RICS surveyor
- provided on the company’s headed paper, and as a PDF file or a digital document that you cannot edit
This valuation is valid for 3 months from the date it is produced.
We need to receive it within 5 working days of the date it was issued.
If we reject the report
You must make sure your surveyor carries out the valuation in the way we’ve asked.
We may reject the valuation if it:
- does not follow our instructions, and you’ll need to provide and pay for a new report
- is too high or low compared to similar properties, and we’ll pay for and arrange a new valuation
If you do not agree with the new valuation
Under the terms of your equity loan agreement the President of RICS will appoint a RICS surveyor to produce a final valuation.
2. Find a conveyancing solicitor
You must instruct a solicitor to carry out the various legal processes that are required.
You can find a conveyancing solicitor on the Law Society’s website.
3. Pay the administration fee and any arrears
You’ll need to pay an administration fee of £200 when you apply to repay your equity loan.
You’ll also have to clear any arrears or outstanding payments.
If you cannot clear your arrears, we may let you:
- continue with your application if you agree to a payment plan
- clear the arrears before the repayment process completes
Your conveyancing solicitor will need to confirm if this is possible.
How to pay
You can pay by:
- online bank transfer
- debit or credit card by calling 0345 848 0235
- cheque
You must tell us if you pay online. Email target.hca@targetgroup.com or call the number above to confirm.
We’re open from 8am to 8pm, Monday to Friday (not UK bank holidays).
Payment details
| Bank name | HSBC |
|---|---|
| Account/payee name | Elderbridge RE: HCA |
| Sort code | 40-05-30 |
| Account number | 14290879 |
| Reference | Your customer reference number or the first line of your address and postcode |
4. Complete the repayment application form
Complete and return the application form to us.
You must tell us your solicitor’s contact details and give them authority to act on your behalf.
Receive a redemption letter
We’ll send you and your solicitor a redemption (repayment) letter after you have sent us:
- the RICS valuation report
- your completed application form
- the administration fee
- a copy of the Memorandum of Sale from your estate agent
This letter will confirm:
- that you can repay your equity loan
- the percentage of equity loan you took out
- how much your repayments will be, based on the valuation report
The repayment amount will include any outstanding interest, fees, and arrears.
Legal undertaking agreement
We’ll send your solicitor a list of items they need to put into a ‘legal undertaking’. This is an agreement which is formalised in paperwork.
If the sale completion date on the undertaking is delayed by more than a week, we may need to create a new undertaking and repayment amount.
If the funds from the sale of your home do not cover the total amount due, you’ll need to make an additional payment.
We will not grant an ‘Authority to Complete’ (a form giving you permission to complete your sale and repay your loan) until you have repaid everything you owe, or we agree a payment plan with you.
Repay your equity loan
We’ll issue the ‘Authority to Complete’ form within 5 days of receiving the legal undertaking from your conveyancer (or when we have agreed any additional payment arrangements).
This means you can repay your equity loan and your property sale can complete.
Completing the process
-
Your conveyancing solicitor transfers the funds to repay your equity loan. The total amount will include any interest, charges, administration fees and arrears that you owe.
-
Your solicitor sends you the relevant completion documents.
-
When we receive the funds, we check that the amount matches the figures on the Authority to Complete and inform your solicitor.
-
Your solicitor will certify this and send you a ‘completion statement’ on headed paper.
-
Once you’ve fully repaid your equity loan and other costs, we apply to the Land Registry to remove the charge on your property.