Several doubts about Help To Buy Equity Loan

pieroabcd

Hello,
I've read the guide about the HTB EL, but I'm under the impression that either I haven't understood completely how it works or it seems to be impossible to know for certain how much I would end up paying, with a wide variability range.
Assuming a purchase of 400k with 50% lent by the bank, 40% by the HTB and 10% deposited by me. In this case the HTB's loan would be 160k.
Is it correct to say that at any time (that means during the first 5 years, or during the 25 years or at the moment of the sale) I can't know for certain how much I have to repay  to the HTB scheme because the value of their equity loan depends on the value of the house at *that* time (or at those times if you repayed it in installments)?
Who decides the value of the equity loan? Is it based on the market value or is it calculated by some other means?
Imagining that the market value of the house (in London) doubled every 8 years, at the end of the mortgage the EL  to repay would be 3x as much as the initial value?
Plus the interests, of course.
I hope that I have misunderstood.
Thanks,
  Piero

Seashell517

pieroabcd said:

Hello,
I've read the guide about the HTB EL, but I'm under the impression that either I haven't understood completely how it works or it seems to be impossible to know for certain how much I would end up paying, with a wide variability range.
Assuming a purchase of 400k with 50% lent by the bank, 40% by the HTB and 10% deposited by me. In this case the HTB's loan would be 160k.
Is it correct to say that at any time (that means during the first 5 years, or during the 25 years or at the moment of the sale) I can't know for certain how much I have to repay  to the HTB scheme because the value of their equity loan depends on the value of the house at *that* time (or at those times if you repayed it in installments)?
Who decides the value of the equity loan? Is it based on the market value or is it calculated by some other means?
Imagining that the market value of the house (in London) doubled every 8 years, at the end of the mortgage the EL  to repay would be 3x as much as the initial value?
Plus the interests, of course.
I hope that I have misunderstood.
Thanks,
  Piero

You need a survey from a RICS surveyor to ascertain the value. If you're selling then HtB use the higher of that valuation and the sale price.

pieroabcd

Seashell517 said:

pieroabcd said:

You need a survey from a RICS surveyor to ascertain the value. If you're selling then HtB use the higher of that valuation and the sale price.

IIRC the guide reads that if the value of the property falls you owe less, because the value of the equity loan is proportionally lower.  The max() shouldn't apply, if I haven't misunderstood.

Seashell517

pieroabcd said:

Seashell517 said:

pieroabcd said:

You need a survey from a RICS surveyor to ascertain the value. If you're selling then HtB use the higher of that valuation and the sale price.

IIRC the guide reads that if the value of the property falls you owe less, because the value of the equity loan is proportionally lower.  The max() shouldn't apply, if I haven't misunderstood.

I wasn't talking about a rise or fall relative to when you bought the property, I was talking about a difference between the RICS valuation and your sale price. 
eg If the RICS surveryor says the market value of your house is £270k, but you choose to sell it for £250k, then HtB will calculate the value of the loan based on the RICS valuation. Equally, if you choose to sell it for £290k, then HtB will calculate the value of the loan based on your sale price. (I believe there is a process for challenging the RICS valuation, but mine came out the same as my sale price so I haven't looked into it.)

SpiderLegs

pieroabcd said:

Imagining that the market value of the house (in London) doubled every 8 years, at the end of the mortgage the EL  to repay would be 3x as much as the initial value?
Plus the interests, of course.
I hope that I have misunderstood.
Thanks,
  Piero

Imagine that indeed. Let’s say you’d paid 25k off that 200k mortgage in those eight years. You’d now be sitting on 305k of equity.
all thanks to the taxpayer helping you get on the housing ladder.