Help to Buy equity loans are part of a Government scheme that was introduced to help buyers gain a foot hold on the property ladder. Under this scheme, prospective buyers could borrow up to 20% of the property value, interest-free for the first five years. It is important to note that the Help to Buy loan was only available for new-build properties and was restricted to a maximum property price of £600,000. The scheme ended in March 2023.
To repay the loan, the borrower can either sell the property, remortgage, pay off the loan or opt to staircase – this is where you gradually increase the share of the property you own. We will explain the different options in a bit more detail in this article.
Help to Buy Loan Redemption
Help to Buy loan redemption refers to the process of paying off the equity loan. It can be redeemed in part or in full, depending on your circumstances, and the amount to be repaid will depend on the current market value of the property. This is because you’ll pay back 20% of the current market value, not of the amount you borrowed. The more your property increases in value, the more you will have to pay back.
There are various ways to pay off the Help to Buy equity loan:
- Full redemption of Help to Buy loan – which involves paying off the entire Help to Buy loan in one go.
- Staircasing – which involves buying back a portion of the loan. This can be a more affordable option, as you will only be paying back a portion of the loan rather than the full amount.
- Remortgage the property.
- Sell the property.
Help to Buy equity loan redemption is usually undertaken just before the five-year anniversary of the loan as it is after this period that you have to start paying interest on the outstanding amount.
When do you need to get a Help to Buy valuation?
If you have purchased a property using the Help To Buy Equity Loan scheme, then you will need a valuation if you plan to sell or remortgage it in the future.
You will also require a Help to Buy survey if you want to pay back the Help to Buy equity loan even if you are staying in the property.
The valuation must be conducted by an independent RICS Registered Valuer also known as a Help To Buy Surveyor and it is your responsibility, as a homeowner, to pay for it.
It is important to note that the valuation report has a validity period of 3 months, so it is crucial to plan the process carefully to ensure that the paperwork is complete before the valuation report expires. Once you have received the report, you will need to send it to Target HCA or Homes England, the former was for loans pre-2018, they administer the scheme on behalf of the Government and they will confirm the repayment amount. During the process it is important to have a licensed conveyancer or solicitor to act for you. Check before you instruct them that the Help to Buy loan redemption solicitors are experienced in this area.
What happens at a Help to Buy valuation?
The valuation involves a RICS Registered Valuer visiting your property and inspecting it, both inside and outside to establish condition, age, size and any other material facts that may impact value.
Depending on the size of the property visits generally last 30-40 minutes. We then return to the office to research comparable properties in the area.
Once the inspection is complete, you will receive the report from your Valuer by email, usually within 72 hours.
If you would like to see what a sample valuation report looks like, click here.
Why Choose Homesurv?
Choosing the right surveyor is crucial when it comes to home valuations. At Homesurv, we understand that buying, selling, or even remortgaging a property can be a stressful experience, which is why we aim to make the process as smooth and straightforward as possible.
We will keep you informed at every stage of the valuation process and provide you with clear and concise jargon free information.
Homesurv is a team of experienced and qualified surveyors who have a wealth of knowledge and expertise in the industry. We were established in 1995 with locally based at offices in Northampton and Peterborough. All surveys are undertaken by a RICS Qualified Surveyors and Registered Valuers, with your interests in mind.
If you would like to get a free quote or find out more about our valuation services, contact us now