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  • Selling on the Help to Buy Scheme

    15th November 2017

    Selling on the Help to Buy Scheme

    Before buying any house via any method, (cash, mortgage or help to buy), you should consider what issues may exist when selling. When buying a house with a mortgage there is a claim registered against the property from the mortgage company. When you buy with the Help to Buy scheme there are two claims against the property. There is a claim registered from the mortgage company (as standard with any property purchased with a mortgage) plus a claim from the Help to Buy Agency for the proportion of their loan made against the property when you purchased.

    Whatever the market price of the property when you sell, you will pay back the same share or proportion to the Help to Buy Agency as the original share or proportion that they helped with when you purchased. This means that the risk of the price decreasing and the reward of price increasing are shared between you and the Help to Buy agency unlike with a mortgage loan where you take on the full risk and reward as you pay back the nominal value of the original loan (plus interest) and not the proportion of the original loan against the purchase price.

     

    Process and Costs of Selling

    You can sell your home at any time. Before selling the property (if you still owe some or all of the equity loan to the Help to Buy Agency) you must get permission from the Agency’s Mortgage Administrator to sell.

    You will also need to pay for an independent surveyor to conduct a valuation in order to prove the market value of the house and the property should be sold on the market at the prevailing market valuation.

     

    Selling above market valuation: you pay a larger monetary sum to the Agency (in line with the proportion owed)

    Selling below market valuation: the agency will not agree to release its charge over the property.

     

    In some cases the Agency will require first refusal on buying the property and may decide to find a buyer themselves. This is more typical with shared ownership rather than shared equity Help to Buy schemes. This can limit the number of buyers as many may not meet the requirements of the Agency which can result in taking longer to sell the property.

    If you are on a shared ownership scheme and purchased a greater portion of the property or on a shared equity scheme and paid off some of the loan early the share that you are entitled to will have changed and the charges registered against the property should have been adjusted by your solicitor / conveyancer when this transaction (called staircasing) was carried out.

     

    Other costs:

    • Any fees or interest outstanding must be paid before the sale is completed
    • The Help to Buy loan is repaid when you sell
    • You pay for the costs of selling (conveyancing fees, estate agent fees etc)

     

    Below are two examples of how much you will pay back to the Help to Buy Agency depending on the sale price compared to when you purchased the property.

    selling on help to buy scheme

     

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