Help to buy valuation too high! Any advice

DA81

Hello,

We are attempting to remortgage to pay off the help to buy loan. 

This is the second time we are attempting this process the first time it fell through as we paid £405k six years ago, the RICS came back at £400k and the bank valuation came back at £380k so they wouldn’t lend us the full amount, at the time we were scared off putting £20k of our own savings in when it looked like it wasn’t worth that much. We knew others in the development whose flats had been valued more sympathetically. 

We have attempted it again with a different surveyor and mortgage lender - our new rate isn’t brilliant but could be worse. The bank valuation came in bang on what we applied for £400k - we’ve just got the RICS back and it’s come in at £410k.

Once again it feels stupid to put in £10k of our own cash in the current climate when the housing market is looking extremely precarious. Also everyone says new builds are like new cars, they lose their value. We live in an area where you can get non new build two bedrooms for £20-30k less.  The report gives 3 examples - two flats sold within the last two months, exactly the same layout (one just downstairs) at £400k and £407k and another flat sold which is a completely different layout, most likely bigger and that sold for £410k! 

Does anyone know of anything we can do? They’ve asked if I can send them three examples - does anyone know if I can use the two in their report? There actually aren’t many examples that are valid as the sale of these flats has pretty much stopped!! 

chanz4

i redeemed myn the other week, x3 estate agents weeks later are 19k under what the rics said

LongoBongo

Others will put it better than me but the interest rate on the HTB loan is significantly less than current mortgage rates. If house prices are going to fall and interest rates are going up then you're probably better off leaving the money as HTB rather than consolidating into a bigger mortgage.

london21

Enjoy the HTB rates as long as you can because normal rates now 5/6%+

silvercar

HTB interest rate is 1.75% from year 5, the rate increasing by inflation each year - why would you want to pay a much higher interest rate on the HTB amount unless you think house prices will rise significantly in the short term?

you are far better off keeping the HTB loan going.

GixerKate

Is the rate you've got lower than the 1.75% HTB interest rate?  If not it probably doesn't make sense to increase your mortgage amount to include the HTB, you could put money into a savings account instead to help pay off the HTB later when the rates etc settle.

microcristallina

My neighbour argued with the RICs surveyor and got them to use some slightly older valuations. Ended up paying £7.5k less than me.

kingstreet

More here;-

https://forums.moneysavingexpert.com/discussion/comment/79530563#Comment_79530563

DA81

GixerKate said:

Is the rate you've got lower than the 1.75% HTB interest rate?  If not it probably doesn't make sense to increase your mortgage amount to include the HTB, you could put money into a savings account instead to help pay off the HTB later when the rates etc settle.

So our rate is higher (3.8%) but the help to buy is £160k so there’s really not much chance of us paying it off. The idea is we would love to move, but there’s not much equity in the property as we are on a 35 year term so kind of have to wait it out until we have more in savings & interest rates drop. The worry would be that if we left it as is and mortgage rates didn’t improve, we would be fine next year as our current mortgage rate on the 60% we own is 1.7% but from next November we would be at the mercy of mortgage rates along with going in to year 8 of being in this property so higher interest on the loan. 

Are there any other reasons why we should reconsider remortgaging? 

DA81

@silvercar @LongoBongo meant to tag you in my comment above! We’re currently in year six so if we left it the worry would be what would happen next year/year after when our current mortgage rate runs out! Can’t work out if I am being a bit dim and not understanding your comments properly and if we are doing something majorly stupid in buying it out but feels like just to leave it could work out equally as expensive! Thanks

silvercar

Think of it as 2 loans. The main mortgage is part 1 and you know what deal you have and an idea on what may be available when you need to find another deal.
part 2 is the HTB. No interest for 5 years, then 1.75% interest only (so a simple calculation), then each year the 1.75 increases by inflation. So the following year 1.75 becomes 1.9% if inflation is 10% and so on.

so you have to think whether you want to pay part 2 at these low rates for a few years or at a higher rate. The higher rate would be the interest rate you have for part 1 and it may well be on a repayment basis rather than interest only. If money is tight both the interest rate and the repayment basis point to higher payments and reasons not to redeem.