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Selling a Help-to-Buy Property

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Are you considering selling your help-to-buy property? The Help-to-Buy scheme has been a lifeline for many first-time buyers and home movers struggling to get onto the property ladder.  However, many people who have used the scheme to purchase their home may be wondering whether they can sell their property and how it will affect their equity loan.

How do you go about selling help to buy property? What happens to the loan? What is the process of selling a help-to-buy property? And what else do you need to be aware of? We explore all the questions you may have if you are considering selling a Help-to-Buy property.

Can I sell my house after using Help-to-Buy?

There are certain criteria you will need to meet in order to sell your property, and you may need to get permission from the Help-to-Buy scheme provider.

Check your eligibility by contacting Target, the organisation the Home and Communities Agency (HCA) use to adminsiter selling your home with a Help to Buy Equity loan.

Email: [email protected]

Phone: 0345 848 0235

Post: Target HCA, PO Box 911, Newport NP20 9PA

Selling your help-to-buy home

If you decide to sell your home, you will need to repay the equity loan provided by the government. Its important to note that the equity loan must be repaid as a percentage of the value of the property at the time of sale, rather than the amount you originally borrowed.

The percentage will be based on the original percentage borrowed. This is typically 20% of the property value (or 40% in London). For example, if you purchased a property for £200,000 with a 20% equity loan of £40,000, and you sell the property for £250,000, you will need to repay 20% of the sale price, which is £50,000.

If the value of the property has decreased, you will still need to repay the original amount borrowed, but you may end up owing more than the property is worth. This is known as negative equity.

However, if the property has increased in value, you may be able to make a profit on the sale.

Don’t forget to budget for other costs of selling a house. Ensure you have a solid plan in place to cover these costs PLUS your outstanding loan balance.

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Will I have to repay my Help-to-Buy Equity Loan before I sell?

The Help-to-Buy equity loan is repayable when you sell your property, or after 25 years, whichever comes first.

When you sell your property, you will need to repay the loan as a percentage of the property’s current value. This is determined by an independent valuer.

The percentage you need to repay will be dependent on how much you borrowed initially and the current value of your property.

Is it better to pay off a Help-to-Buy equity loan before selling?

This depends on your individual circumstances. If you have the means to pay off your loan before selling, this means you won’t need to pay back the loan after the sale. This could make your home more attractive to potential homebuyers.

It’s also worth noting that paying off your equity loan can have an impact on the resale price of your property. Without the equity loan, the resale price of your property will no longer be restricted by the Help to Buy scheme.

Also bear in mind that the resale price restriction decreases over time, so the longer you own the property, the more flexibility you have in terms of the sale price.

Paying off your Help to Buy equity loan is not an insignificant expense, and you should think carefully if it’s the right financial decision for you.

We recommend that you speak with a financial advisor or a mortgage broker to determine what is the right course of action based on your circumstances.

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How soon can you sell a Help-to-Buy property?

Under the Help-to-Buy scheme rules, there are no restrictions on when you can sell. You can sell your property at any time, so long as you can repay the equity loan provided by the government.

However, it is important to keep in mind that selling your Help-to-Buy property too soon after buying it may have financial implications.

If you sell your property soon after buying it, there is a risk that the property may not have increased enough in value to cover the outstanding balance of your loan. This could mean that you have to pay back more than you receive from the sale of your property, which could leave you in a difficult financial position.

So the longer you hold onto your property, the more likely it is to increase in value, which means that you may be able to sell it for a higher price and potentially make a profit.

What happens to Help-to-Buy when you sell?

When you sell the proceeds of the sale must be used to repay the equity loan that you received from the Help-to-Buy scheme. The amount that you need to repay will depend on the percentage of the property value that you borrowed.

  • Your Help-to-Buy agent will need to be informed in writing and provided with evidence of the sale.
  • They will calculate how much you need to repay and provide you with a statement of the outstanding balance.
  • You will need to ensure that the sale price is enough to cover the outstanding loan balance and any other costs associated with the sale,
  • If the sale price is not enough to cover the outstanding loan balance, how will you make up the difference? This may mean that you need to use some of your own savings or take out a new loan to cover the shortfall. Alternatively, you may be able to negotiate with the Help-to-Buy agent to repay the loan in instalments or to extend the repayment period.

What is the process of selling a Help-to-Buy Property?

Before you can sell your property to pay off your help-to-buy loan, you will need to contact Target either via email [email protected] write to: Target HCA, PO Box 911, Newport NP20 9PA or you can call on 0345 848 0235.

The process for selling a Help-to-Buy property is like selling any other property, but with a few additional steps:

Get a valuation report

To determine the value of your property, you will need to get a property valuation. You can do this by contacting a professional surveyor.

There are criteria that surveyors must meet:

  • be both RICS-qualified and registered
  • be independent of any estate agent
  • not be related or known to you
  • inspect the inside of the property
  • provide at least 3 comparable properties and sale prices
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Instruct a solicitor

Instruct a solicitor as early as possible, they will carry out all the necessary legal processes for you.

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Set a selling price and get sale ready

Once you have a property valuation, you can agree on a selling price for your property. It is important to set a price that is realistic and takes into account the outstanding balance of your Help-to-Buy equity loan.

Find and instruct a local estate agent to help sell your home.

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Once you’ve found a buyer, you will need to inform Target of the sale. They will provide you with a staement that confirms the outstanding balance of your equity loan, which will be used to calculate the amount you need to repay.

Complete the sale

Once you have agreed on a sale price with the buyer, you can complete the sale. You will need to work with a solicitor or conveyancer to handle the legal aspects of the sale.

Repay the equity loan

After the sale is complete, you will need to repay the outstanding balance of your Help-to-Buy equity loan. This will typically be done through the solicitor or conveyancer handling the sale.

The process of selling can vary depending on your individual circumstances, and it is always advisable to seek professional advice from a financial advisor and solicitor before you sell.

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What are the other costs involved in selling my Help-to-buy Property?

In addition to the outstanding balance of the equity loan, there are other costs of moving to consider:

  • Estate agent fees: fees can vary, but typically range from 1% to 3% of the sale price.
  • Legal fees: You will need a solicitor or conveyancer to handle the legal aspects of selling your property. Legal fees can vary depending on the complexity of the sale, but typically range from £500 to £1,500.
  • Valuation fees: Some lenders may require an independent valuation of your property before approving the sale. This can cost upwards from £300+.
  • Repairs and maintenance: If your property needs any repairs or maintenance work before it can be sold
  • Moving costs: Moving your belongings to your new property can include hiring a removals company or renting a van.
  • Early repayment charges: You may be subject to mortgage redemption or early repayment charges. These charges can vary depending on your lender, so be sure to check the terms of your loan.
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Last Updated: November 22nd, 2023

Phil Spencer

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