Selling & help to buy loan redemption

breakingbad

So, we've today accepted an offer on our property, and in the same day had an offer accepted on the property we like.

Problem is, when the house first went on the market, my wife (prematurely) arranged a RICS valuation at the start of July to initiate the Help to Buy redemption process. The house was valued at £235k. However, we ended up selling for £220k (the same as we bought for in 2014) due to our hands being forced by an almost identical house in the street reducing their price to £220k :mad:

So, now we are in the very very annoying situation of selling for £220k but having to repay 20% of £235k (a nice way to throw £3k away!) :mad:

The thing is, the RICS valuation expires on 1st October, and will require a desktop revaluation (only £50). I've spoken to the surveyor and she is sure she can value the house closer to £220k as there have been a few properties sold recently for less than expected.

My query is - are we ok to start the conveyancing process with solicitors now, or would we have to wait until the house is revalued?

The Help to Buy pack explains the redemption process here... https://www.myfirsthome.org.uk/wp-content/uploads/2016/05/CUSTINFO-Approved-04May2018.pdf
Am I correct in thinking it would only delay obtaining the "authority to complete", which would likely be a month or two away anyway?


Any advice appreciated!

Jane_B

One thing to note, is that the price you sold for will be taken into account when deciding the final value to repay. So it might not be throwing away £3k. If the RICS value is different to the sale price they can sometimes meet in the middle (this is what I was told when I inquired a few weeks ago)

sal_III

Did you mention to the RICS surveyor that the valuation is for HTB equity loan redemption? I have read somewhere that if you do that they are giving a more reserved valuation.

kingstreet

At what point is a valuation going to be sent to Target?

This is going to determine what value they will take. It's the higher of valuation and purchase price on a sale, so if you can delay until the first valuation expires and get another lower one, you should pay less.

You'll need to ask your solicitor when it needs to go in as they have to obtain the ATC.

breakingbad

Jane - the help to buy redemption process guidelines state that they will use 20% if the sale price or the RICS valuation, whichever is higher.

kingstreet - Target already have the original valuation, as per step 1 of the redemption process, but we haven’t yet filled in the paperwork yet or handed over the £200 fee. I spoke to Target today, who think that if a revised valuation is submitted in October, it is likely the amount owed would change to reflect 20% of this? Just wish I had that in writing! 🙈

masatoi

Hi breakingbad

Jane - the help to buy redemption process guidelines state that they will use 20% if the sale price or the RICS valuation, whichever is higher.

If you don't mind me jumping on here any chance you could post a reference here?

I read Target documents about redemption it only says

In the case of a house sale the repayment sum is based on the market valuation or the
sales price (the higher of the two

I'd also like to know if that applied to HTB London.

Thanks

kingstreet

Redeem: Repaying your loan when selling your property

If you sell the property against which your loan is secured, you will need to repay your loan in full. This is also known as loan redemption.

The repayment amount you will be required to pay is calculated as a proportion (percentage) of either the current market value or the agreed sale price of your home (whichever is higher).

https://www.myfirsthome.org.uk/iwantto/redeem/

Why wouldn't it apply to London, same as elsewhere?

Crashy_Time

sal_III wrote: »

Did you mention to the RICS surveyor that the valuation is for HTB equity loan redemption? I have read somewhere that if you do that they are giving a more reserved valuation.

Why?......