The Scheme has its advantages and disadvantages, and the buyers should be aware of increased amount of compliance work needed to be carried out by their Property Lawyers when representing Help To Buy/Homes and Communities Agency (HTB/HCA) in addition to their first lenders.
What are the main legal issues which Buyers should be aware of before deciding whether Help To Buy Loan is for them?
The scheme is now only limited to First Time Buyers.
Also, the scheme is limited to new build properties.
The Buyer cannot sublet the Property whist HTB/HCA Loan is outstanding.
The Buyer cannot increase the lending from their first lender without HTB/HCA’s permission.
The Buyer cannot extend or alter the property whilst HTB/HCA Loan is outstanding unless a permission from HTB/HCA is obtained (which may be difficult to obtain).
The loan will be against the equity in the Property, i.e. if you borrow 20% of the equity, you will need to pay of 20% of the equity at the time when the Property is sold.
The loan is interest free for 5 years from the date of completion. Once this date has passed, the interest payable will be 1.75% of the initial market value of the property subject to annual review and increase
If you need legal advice please contact one of our team by completing the form below.
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