During the term of your Shopping Assistance loan, you can choose to repay at any time. The most common time to repay is before the fifth anniversary date on which the loan was taken, as that is when interest is implied. Interest payments start at 1.75% and increase each year with inflation.
The most common terms of redemption are either the loan will be repaid simultaneously with the sale of your Property, or by voluntary redemption.
When redeeming your purchase assistance loan, you can choose to repay in full or in part by escalation. Laddering your loan allows you to repay a percentage, the minimum being 10%, with the rest of the loan being repaid later. The Homes and Communities Agency (Target) will note your partial refund on their systems, however, the title register of your property will remain unchanged. It is only when your loan is repaid in full that the Homes and Communities Agency waives its fees.
Financing your purchase assistance loan
When redeeming your purchase assistance loan, you can choose to finance the repayment through a mortgage, either with a new lender or a new advance from your existing lender. You will be responsible for obtaining your new mortgage offer which should be provided to your solicitor as soon as possible.
You can fund your repayment using your savings, in which case you will need to provide your solicitor with proof of funds so they can verify that the necessary funds are available.
What do you need to do
In order to start the buyout process, you will need to have a RICS expert carry out a property valuation. The link below can be used to identify a RICS Charters expert:
Once an appraisal has been carried out and you have received a copy of it, you will need to send it to the Homes and Communities Agency, along with the completed Form A (for a house sale) or a Form B (for a redemption without a sale), and make payment of their administration costs totaling £200.00. You can send the assessment and corresponding form to Homes and Communities Agency using the email address below:
Once the Homes and Communities Agency has received all the required documents from you, they will send a buyout quote to your appointed solicitor.
The expertise is valid for a period of three months from the date on which it was carried out. If you are unable to repay your loan within this time, the Homes and Communities Agency can carry out a desk assessment valid for a further three months. You must redeem within six months of the initial valuation.
Once your solicitor has received the Home and Community Agency buyout quote, they will complete and return the engagement letter to the Home and Community Agency 15 working days before the scheduled completion date.
The Homes and Communities Agency will then issue permission to complete to your solicitor, usually within 5 working days of receiving the undertaking. Once this has been received, your solicitor can proceed with completion.