Do You Need ‘Help to Buy’ Your First Home?
What is the 'Help to Buy' scheme?
Help to Buy is a scheme in which the government or housing association lends you up to 20% of the cost of your newly built home, so you only need to find a 5% deposit and a 75% mortgage to make up the rest of the value. You do not have to make any repayments on the loan for the first five years, after which you will start doing so monthly.
Following the purchase, you can choose at any time to make a voluntary part repayment – ‘staircasing’ – or a full repayment of the Help to Buy assistance at the prevailing market value. The minimum voluntary amount is 10% of the market value at the time of repayment.
When you sell your home, you must repay the Help to Buy assistance from the proceeds, unless you have already paid off the loan. The amount due at sale will relate to the proportion of the house’s value that the loan originally covered: so, if Help to Buy provided a 20% contribution, your repayment will be 20% of the total market value when it is sold, less any repayments you have already made.
Whether you are staircasing or selling your property you will need an independent valuation so that Help to Buy can calculate how much you need to repay. This may affect how much it will cost you depending on the market value at that time.
How long will that valuation last while you are buying back some of the 20% or selling the property?
The valuation lasts three months.
How much will a Help to Buy valuation cost?
The cost will depend on a number of factors. You would need to speak to a surveying firm to get a quote.
What if I still haven’t finished buying back the 20%, or I don’t sell the property?
In this scenario, you would need to contact your surveyor within the last two weeks of the 3-month period. The surveyor would then be able to issue you with a desktop valuation, which is valid for a further 3 months.
What does the surveyor need to complete a valuation?
Other than your personal details, the surveyor needs to know:
- whether the loan is with a housing association or Directgov Help to Buy equity loan (Target or HCA)
- what percentage of the property you own
- what criteria the surveyor may need to follow
- the names required on the report.
You should have all of this information ready before you contact the surveyor. They may also have additional questions depending on your specific situation.
What if I don’t agree with a high valuation because it means I must pay back more?
A valuer must follow strict RICS guidelines, and in valuing your home will consider three similar properties sold recently. This means the valuation depends on the housing market, and is carried out to the same standards used throughout the UK and indeed the rest of the world. However, surveying firms generally offer a means of appealing your valuation.
What should I do next?
It is probably a good idea to get some professional advice from your bank, solicitor or financial advisor on the next steps. You can read up on the Help to Buy scheme online.
This article was written by Sara Owen of White Horse Surveyors. The team at White Horse Surveyors wish you good luck, and hope you enjoy your new home.
Once you are signed up and you need an independent valuation, White Horse can help. You can get in touch with the sales team directly on 01249 569010 or email them.