Help to Buy - A Cautionary Tale!
Jack & Jill wanted to buy their first home together, but Jill was finishing her studies at University and didn’t yet have any income. So they decided to make use of the Help to Buy equity loan scheme which, along with some help from Jack’s parents, would allow them to buy their first home.
Move forward 2 years and the fixed rate on their original mortgage was up for review and as Jill had now secured a good job, they were keen to repay the Equity loan by re-mortgaging and raising additional funds. The mortgage provider selected was keen to assist and offered to meet the cost of any valuation and legal fees.
Once the mortgage was agreed, Jack tried to find out how to go about repaying the Equity loan, the control of which he then discovered had moved from the Home & Communities Agency to a private company called Target Services Ltd.
If you want to repay the loan he was told, this will need to be handled by your solicitor and we will need confirmation of the valuation of the property from an independent RICS qualified surveyor as the loan is a % of its current value. This worried Jack as the valuation had been conducted by the mortgage company and usually they won’t let you see it.
Luckily for Jack & Jill, their mortgage advisor got a copy of the valuation and a covering letter from the lender to confirm the valuation and surveyor details. Without their help, Jack & Jill could have been forced to have an independent valuation conducted and meet the cost themselves.
However, the tale does not quite end there, as Jack & Jill have now been told by Target Services Ltd that in order to work out the redemption figure for the Equity Loan it will cost an administration fee of £200. As a sum that is 20% of £230,000!
Help to Buy, be it the schemes themselves and now it appears the ISA’s, may not be the straightforward panacea that they first appeared to be.