Help to Buy Valuation FAQs
Our latest blog post provides all the answers to the most common Help to Buy Valuation FAQs. Read on to find out more information about the Help to Buy scheme and what is involved with redeeming a Help to Buy Equity Loan.
What is Help to Buy?
The Help to Buy scheme is a government initiative in the UK designed to help first-time buyers get onto the property ladder. The scheme offers a range of options, including a shared equity loan and a mortgage guarantee, to make it easier for people to buy their first home.
The shared equity loan option allows first-time buyers to borrow up to 20% of the cost of a newly built home (or 40% in London) from the government. This means they only need to put down a 5% deposit and obtain a mortgage for the remaining amount. The loan is interest-free for the first five years, after which borrowers are charged an interest rate of 1.75%, which increases annually by the rate of inflation plus 1%.
The Help to Buy Scheme has now finished taking new applications.
What happens next?
If you want to remortgage or sell your property, you will more than likely need to redeem your loan and would need a Help to Buy redemption valuation. This valuation is also required should you wish to redeem part of your loan.
This is a valuation report which should be conducted by an independent surveying firm. If you are remortgaging and incorporating your loan into your new mortgage, a valuation report will be conducted by your Bank or Building Society. In these instances, the same surveying firm cannot undertake the report for the Bank/Building Society as well as the Help to Buy redemption loan, as this is deemed a conflict of interest if they are being completed for the same transaction.
How do I instruct a Help to Buy Valuation?
If you would like a valuation report completing for the purpose of redeeming your Help to Buy loan, all you need to do is contact our Admin Team on 01332 830202 selecting option 2 and they will take your information and talk you through the process. Alternatively complete our contact form here.
What happens when the report is completed?
Once we have completed the report, this will be issued to you and a copy will also be issued to Homes England, who are the administrators for all Help to Buy loans.
How long is the report valid for?
The valuation report is only valid for 3 months from the date it was produced as per Homes England guidelines. If the loan has not been redeemed during these 3 months, Homes England may advise that you need to obtain an updated valuation report. There is a charge to produce an updated report as the surveyor will need to check the comparables before issuing this.
Before instructing an updated report, please check with Homes England to make sure it will meet their requirements. It is important to obtain the updated report within 3 months as if this falls outside this time, it may not be accepted and would require a new instruction and inspection resulting in a full charge.
What happens if the loan is not redeemed within 6 months?
If you have had an initial report and an updated report 3 months later, Homes England guidelines state a reinspection of the property must occur to see if there are any changes to the property since the initial inspection and provide an updated report. There is a charge incurred for the surveyor to conduct a reinspection of the property and to produce a new report.
What happens if my property is valued higher than when I purchased it?
The valuation figure provided is based on current comparable evidence and considers properties which have recently sold which are similar in style and age. If house prices have increased, this will result in your valuation being higher.
As the Help to Buy loan is based on a percentage of the value of the property, this means the loan you need to repay could be significantly higher if your property value has increased during the period you have had the loan.
For further information, visit the Homes England guidance page.