What Is A Help To Buy Valuation?
What is Help to Buy?
Introduced by the UK Government in 2013, many homebuyers took advantage of the Help to Buy scheme to get a foot on the first rung of the property ladder.
Help to Buy is a shared equity scheme through which first-time buyers can borrow up to 20% of the cost of a new build house (40% if you live in London).
Repaying your Help to Buy loan
If you bought a home using the Help to Buy scheme, your loan is interest-free for 5 years. The full loan must be repaid after 25 years. Alternatively, you can choose to repay the loan sooner, remortgage or pay it off when you sell your property.
When the time comes to sell, the amount you must pay back will be calculated based on the current market value of your home – not the original purchase price.
Help to Buy Valuations
Appointed by the Homes and Communities Agency to administer the Help to Buy scheme, Target requires you to obtain an independent Help to Buy valuation from a RICS registered valuer.
This independent Help to Buy valuation will determine the current market value of your property and, as such, the amount you must repay can be calculated.
If the value of your property has decreased, then the amount you must repay will be less than you originally borrowed. However, if the value of your house has increased, so will the amount you must repay.
When you have obtained a Help to Buy valuation from a RICS registered valuer, you must send it to Target who will tell you how much you need to repay.
It is important to note that your Help to Buy valuation will only be valid for three months. If the report expired, you may request a desktop (remote) valuation report for a further three months, but if the six-month lifespan of the report expires, a fresh physical property inspection will be required.
It is therefore important that you plan your timings carefully. If you get a valuation report too soon, it may not be valid by the time the sale of your property is completed.
This is also important to bear in mind if you are remortgaging as this process can take some time.