Chartered surveyors urge Help to Buy action

Ian Lee, director at McAndrew Martin
Ian Lee, director at McAndrew Martin

A Portsmouth-based firm of chartered surveyors with nationwide reach has warned homeowners with Help to Buy loans against falling foul of an interest fees 'timebomb'.

McAndrew Martin has urged householders to check that the interest-free period on their home loan is not about to expire.

The independent, multi-disciplinary firm has recorded increased instructions in property valuations as the Government's Help to Buy scheme nears its fifth anniversary.

Buyers using the initiative are able to gain a five-year interest free loan of up to 20 per cent of the value of a new-build property - meaning they only need a five per cent  cash deposit, while taking out a 75 per cent mortgage.

Now the first borrowers under the scheme face the end of their interest free period on the Help to Buy loan.  Then, new rates of 1.75 per cent will apply and rise every year by the retail price index (RPI) of inflation plus one per cent.

Alternatively, homeowners could re-mortgage although this relies on there being enough equity in their property, or sell. Another option is to find a new Help to Buy property with another five-year interest free period.

Ian Lee, director of general practice at McAndrew Martin, said: "Help to Buy has been a flagship Government scheme to help people onto the housing ladder.

"Some have described the loans as a 'ticking timebomb', but only if people don't take any action.

"We have noted an uplift in instructions for valuations both for Help to Buy purchases and independent valuations for re-mortgaging and sales.

"In the case of sales homeowners do need to be aware they will have to repay the equity loan.

"The amount will be based on the market value of their property at the time sold rather than the original amount."

Ian, who is a Fellow of the Royal Institution of Chartered Surveyors (FRICS), added: "Some householders will have already managed to pay off their equity loan before their five-year interest free period elapses.

"We would urge others in the scheme to check their documents and plan ahead to ensure they avoid any unnecessary fees or costs."

The Resolution Foundation think tank has described the Help to Buy loans as a 'ticking time-bomb'.

General practice is one of McAndrew Martin's six disciplines. The others are architecture, building surveying, mechanical and electrical engineering, project management and contract administration and structural engineering.

The company covers Hampshire, London and the South from offices in Portsmouth and London.

Call 02392 697193 and visit www.mcandrewmartin.com and https://www.helptobuy.gov.uk/ for more details.

 

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