Help to Buy equity loan scheme means you can move with just a 5% deposit and is available for both first time buyers and existing home owners. The equity loan from the Home and Community Agency is up to a maximum of 20% of the purchase price. But if you’re looking to repay, re-mortgage or sell your property then you may need a Help to Buy valuation.
In November 2015, the Government extended the scheme which is likely to run to 2021 dependant on availability of funds. The principal of the scheme is that the purchaser provides 5% deposit, the HCA or Government provide 20% of the deposit and the mortgage lender makes up the remaining 75%.
Repayment of the loan is required after 25 years or earlier if you sell your home. You can repay the 20% loan during the 25-year period including re-mortgaging. The 20% repayment figure is calculated on the market value of the property at the time of repayment.
Here’s a video which explains the scheme:
Target HCA are the administrators for the repayment of the loan with the market value taking into account comparable evidence as defined by them. As the 20% repayment is calculated at the market value at the time and not the original purchase price you can pay back less in if the market value has decreased over the period. If the value exceeds your original purchase price then the 20% calculation will take account of the increase in value and you will repay more than you originally borrowed. In this case the HCA will require a calculation based upon the higher value of either your sale price or the RICS valuation.
In order to determine the repayment value then you will need to instruct a Help to Buy valuation and this is where Readings can help. Contact us for more information and see how we can help you.