HELP TO BUY VALUATIONS

Valuations - Understanding Valuations on Help to Buy Properties

Help to Buy was a government scheme first announced in the March 2013 Budget. It was designed to help anyone struggling to save a deposit for their first home or move up the property ladder as they had limited equity. There were two main elements of the Help to Buy scheme – equity loan and mortgage guarantee. Like all things in life, the scheme came to an end towards the close of 2016.

At this point, many people will be coming to the end of their special mortgage deal and looking for another or selling their first property and moving on.

Currently, the housing market is a little slow as not enough properties are coming onto the market. This means that demand is rising steadily and prices with it, certainly in London, but even here in the North of Essex now.

Unfortunately, we cannot predict whether these increases will be sustained, or market prices will become stabilised in the foreseeable future. It would be wise to give serious consideration to your situation should prices fall after purchase, especially if taking on a mortgage.


What happens if the market value is not enough to repay the loan?

If the market value of your property has fallen, you may find at the time of redemption you are unable to repay the loan in full.

Provided the market valuation you supplied is approved and you have met all the terms of your loan the Lender, will accept a reduced repayment. The amount is calculated by subtracting the outstanding balance on your main mortgage (excluding early redemption penalties) from the sale price or the market value of your property (whichever is higher). We will liaise directly with your solicitor to ensure the correct amount is repaid.

 

 

The Help To Buy Scheme

When it comes to the Help To Buy Scheme, bear in mind that the loan itself does require repayment after 25 years or earlier if you sell your home. Say you had a 20% loan under the scheme – but it may be some other proportion. It is possible to re-mortgage or repay the 20% loan at any time during the 25-year period, but it is important to note that the 20% is calculated on the market valuation at the time of repayment and this will be calculated by a Help to Buy valuation.

 

The repayment is calculated at the market value at the time and is, therefore, not reliant upon your initial purchase price. If the equity loan is not paid whilst you are still living in the property, when you come to sell, the government will reclaim its 20% stake in your home at its current market value. Therefore, you may be paying more than you originally borrowed, if the value has increased.


If you were to sell your property then a calculation based upon the higher value of either your sale price or the RICS valuation would be required. However, a sale value can be higher if supported by historic market evidence, ascertaining it to be within a fair margin of the valuation prior to the sale.

 

Survey Reports -

Usually there are three choices of survey, from the basic mortgage survey which is the cheapest and the one required by a mortgage lender, the Homebuyers Report, priced mid-range, with the most expensive being the full building survey.

For Help To Buy Scheme valuations the Shared Equity Company does not need a survey report. A report with a professional opinion on value supported by comparable evidence, with a lightly detailed description showing the interior has been inspected will normally suffice. Pictures of the exterior and the interior are also included for the reports we prepare, but it must be made clear that such reports are not survey reports.

This valuation cannot be used for a new mortgage or other loan.

The Process

Our surveyor will need to have the full address and an outline of what the property comprises, for initial research and fee estimate purposes.

A brief inspection is made, but again it must not be considered as a survey. The roof space, if any, is not inspected. If any significant faults are noticed generally during that inspection, they will be mentioned for more detailed investigations to be made. The report is normally ready to send out in 2 - 3 working days after the inspection.

We generally provide two copies of the report and pictures, so that one can be sent to the Shared Equity Company. You will be asked to send us the details of the "Instructions for Valuers" in the Home Information pack from your Shared Equity or Housing Association as soon as possible. It is vital we work to the latest version, to avoid any unforeseen circumstances.

We must have the exact and full name of that Shared Equity Company, as they will be authorised to make use of the report within its wording, and if it is not stated correctly in the report, it will not be accepted.

As usual in these cases our fee will be dependent on the type and size of property, so it is subject to receiving the outline of the property from you. We will require payment either before or when we inspect the property, either as a cheque, or if you wish we will send a draft invoice with bank payment details. A receipted invoice will be provided with the report.

We will then arrange a date to visit and inspect. Our website will provide all the information about us that you or the Shared Equity Company will be likely to need.

What is the difference between a Mortgage Valuation and a Survey?

Please appreciate that the mortgage valuation report is prepared for your lender, but not for you. It will possibly give you a few lines of general advice, even though it is concerning the biggest investment you will make with the main purpose of a mortgage valuation to confirm the mortgage is suitable security for the lender. That might briefly mention defects that affect the property as security for the mortgage loan, for further investigations. On many occasions, lenders do not provide you with a copy of the mortgage valuation report, and so leaving you with no information about the value or condition of your prospective property.

Therefore, as the buyer it is vital that you do not rely exclusively on a mortgage valuation when making your decision as to whether to proceed with the property purchase.

 

To be clear, a valuation is not a survey. It is extremely easy to confuse the lenders valuation report with a survey. We will be happy to accept your instruction to carry out a survey on your behalf, as independent surveyors, this will mean you will receive independent, professional advice on your potential property.

 

 We are here to help you with all types of surveys. We will also carry out independent Valuation reports for properties purchased under the Help To Buy Scheme.

Eyesurvey

Our Principal, Leslie J Long FRICS is a Fellow of the Royal Institution of Chartered Surveyors (RICS), so you are guaranteed a standard and quality of service because we follow their code of conduct. He has carried out various kinds of property dealings since 1971.

Eyesurvey have provided a variety of independent professional services for both residential and commercial properties for the last 25 years, our Principal, Leslie J Long FRICS having over 45 years of property experience in total.

We cover all of Essex and south Suffolk postcodes (IP, CO, CM, RM, IG, SS) specialising in a huge range of property services for both residential and commercial buildings with a friendly and fast response to instructions under the code of conduct of the Royal Institution of Chartered Surveyors (RICS), which is the principal professional society for the industry.

We look forward to receiving your instruction and being of service to you.

E: LJL@eyesurvey.co.uk
T: 01206 545 139
F: 01206 364 988