Guidance

Words we use to talk about your Help to Buy: Equity Loan

Published 6 March 2024

Alterations

This means making structural alterations to your home – such as changing a bathroom into a wet room or adding an extension – as opposed to just refitting a kitchen or painting a living room.

APR

Annual Percentage Rate means the interest rate for a full year.

Arrears

This means one or more of your monthly interest payments or management fees have not been paid. Paying interest and fees when they are due is a condition of the equity loan and not keeping up with interest payments and management fees may place ownership of your home at risk.

Authority to Complete

An official document which is sent to you to confirm all necessary documents and process steps have been followed, and you have permission to complete the sale of your home or make part or full repayment of your equity loan.

Authority to Proceed

An official document which is sent to you confirming that all necessary documents have been received and you have permission to proceed with their transaction (eg. remortgaging). 

Completion/sale completion

When a house sale has completed to the point where you are able to pick up the keys and move your belongings into the property. At the point of completion, you legally become the owner of the property. 

Completion Statement

A document that sets out the financial transactions (incoming or outgoing) that occur when selling, partly repaying an equity loan or remortgaging a Help to Buy property. It is essentially an invoice that includes administrative fees or other additional costs. 

Conveyancer

A legal adviser, solicitor, legal executive or firm specialising in the legal aspects of buying and selling property. 

Deed of Accession

A document used in the Transfer of Equity process which confirms you as the new owner to the title (ownership record) of the property, the repayment mortgage and the equity loan. It is sent with your application to HM Land Registry (HMLR) to register the change and must be completed by all parties involved. 

Deed of Postponement

A Deed of Postponement is the legal agreement between the first charge mortgage lender and the second charge mortgage lender. 

A first charge mortgage lender is the first mortgage charged to a property, which means it takes priority over any other mortgage. A Help to Buy: Equity Loan is always the second charge.  

You need a Deed of Postponement when you remortgage your Help to Buy: Equity Loan. It gives priority to the lender holding the first charge, but ultimately both lenders will be paid. 

Deed of Release

A document used in a Transfer of Equity process. It confirms the changes to your ownership of the property and who remains on the repayment mortgage. The deed is sent to HM Land Registry to make the changes to the title register. All parties to the transfer of equity must sign the Deed of Release. 

DS1

Is the notice to advise HM Land Registry that a Help to Buy: Equity Loan has been repaid and is to be removed from the title deeds. This is Homes England’s receipt that the equity loan has been paid.  

Deed of Rectification

Is a document that clarifies a mistake or an error relating to a contract or title deed for the ownership of land. It is drafted to reflect the variation, signed by all relevant parties and registered at HM Land Registry. 

Equity

A legal term describing how much of a property you own, as a percentage. 

Equity Loan

An equity loan is a loan that’s secured on a property. In the case of Help to Buy, it’s the money borrowed from Homes England – in the form of an equity loan and, in return, we own a percentage of your property, on behalf of HM Government. We give up our share in your property once you have repaid the equity loan and all other charges in full. 

Freehold

The common ownership of real property or land. A freeholder owns the property, including the land it’s built on, outright. The name of the freeholder is on the Land Registry records as the owner of the property and land. 

First Charge Mortgage

A first charge mortgage is the first mortgage charged to a property, which means it takes priority over any other mortgage. A Help to Buy: Equity Loan is always the second charge. 

Interest

This refers to the costs involved in borrowing money. In the case of Help to Buy: Equity Loan, it is interest free for the first five years, and then you start paying an interest fee and a monthly management fee. These interest fees are separate to loan repayments and do not count towards the repayment of an equity loan. 

Leasehold

A form of land or property tenure where a leaseholder buys the right to occupy a property. You only own a leasehold property for a fixed period. If you own a home leasehold, you have a lease from the freeholder of a building to use that property, but your name is not on the Land Registry records as the owner. Since June 2019, leasehold houses are not included in Help to Buy schemes, except in very rare circumstances. 

Legal Undertaking

A formal agreement to do something or follow through with a process. 

Letter of Undertaking

A letter from you/your solicitor to the equity loan administrator stating you will fulfil an obligation that’s been previously agreed. For example, during part repayment of an equity loan, a standard letter of undertaking is sent to the equity loan administrator confirming the anticipated completion date of the payment, anticipated interest charges, and total repayment owed. In return, the equity loan administrator issues Authority to Complete, which allows you to then make the part repayment.

Loan-to-Value limits

A term used to describe the ratio (as a percentage) of the loan compared to the total value of your property. A Loan to Value (LTV) limit is used to calculate the maximum amount we will allow you to borrow when remortgaging, based on the value of the property. 

Market Value

How much your home is likely to sell for if it was put on the market. 

Monthly Management Fee

A £1 fee collected monthly by Help to Buy or via Direct Debit. This is not part of the equity loan or an interest repayment. 

Partial Redemption

This refers to when you make a part repayment towards their equity loan. This can be no less than 10% of the current market value of your home and it can leave no less than 5% of the current market value of your home left to pay. Also known as partial redemption and sometimes called ‘staircasing’.

Redemption

This refers to when you repay your equity loan, interest fees and all other charges in full. Also known as full redemption.

RPI – Retail Prices Index

This is a government measure for how much the cost of goods and services is changing. A rise in RPI would lead to a rise in the amount of interest we charge you, as RPI is used to calculate the increase in interest charges each year. For Help to Buy: Equity Loan (2021-2023) we use CPI. 

RICS Valuation

The market value of a home according to a Royal Institution of Chartered Surveyors (RICS) surveyor, or, in other words, how much a home is likely to sell for if it was put on the market. You must use RICS to have your home valued, we always request that the valuation is carried out by a RICS-certified surveyor. 

Homes England works out the equity loan amount you need to repay based on the market value of your home and the equity loan percentage at the time you choose to repay.  

Subletting

With Help to Buy homes, this is where you (the homeowner or homeowners), have rented out the entire property to somebody else. Renting out a room is permitted, but subletting the whole property is not allowed, except in specific circumstances.  

Transfer of Equity

This is a legal process used to change the ownership of a home. You might be added or removed but the homeowners must match the names on the repayment mortgage.