How To Sell A Property Purchased Through A Help-To-Buy Scheme

How To Sell A Property Purchased Through A Help To Buy Scheme

Over the past several years, hundreds of people in the UK have finally used the Help to Buy scheme to get on the property ladder, and it’s worked quite well. If you’re one of the people who utilised the scheme, you may wonder what happens when you’re ready to sell that first home you bought. Whether you’re selling so you can relocate for a job or you’re just ready to move into something bigger, knowing whom to turn to, what additional costs you might face, and the other concerns you should be aware of when selling a home after using Help to Buy is an absolute must.

How Does Help To Buy Work?

The Help to Buy program is a government scheme that gives first-time buyers better access to properties by lowering the total deposit amount they must save. It means they are given a house-for-sale deal that isn’t available to others. In this scheme, buyers can borrow the standard mortgage amount and make just a 5% deposit on the loan. Essentially, Help to Buy is a second loan for up to 20% of the purchase price of a home, or 40% of the purchase price of a home in London. The amount can be borrowed interest-free for up to five years. Borrowers can buy a home worth as much as £600,000 in London, but the purchase price varies by region. For example, the maximum purchase price in the West Midlands is just £255,600, but in pricier markets like the South East, the amount ranges up to £437,600. Not only are there limits on the prices of homes that you can purchase in this scheme, though, but the homes themselves must also be new builds. The loan begins to take on an interest rate starting in the 6th year, and from year seven onward, the loan’s interest rate increases. It must be paid off by the time you reach year 25.

Repaying the Help to Buy Scheme?

The Help to Buy scheme either has to be paid off within 25 years of you having borrowed the initial home or when you sell it. Essentially, you have taken out a second mortgage on your property, so you can’t sell it until the agency you borrowed the money from – the Homes and Community Agency – is repaid their money. You have to repay the loan in full, too, at the time you sell your home. HCA uses the firm Target. Help to Buy loans are managed through that company, so they’re the ones you’ll contact when you are ready to make your repayment.

The process begins the moment you get an offer on your property. You must have it valued by a chartered surveyor at that point, then you have to let Target know how much the offer is on your home and that you have instructed a surveyor. You can do so by entering “Target HCA contact number” into a search engine. There is a single Help to Buy contact number you can call for a bit of assistance at that point. Once the surveyor’s valuation report comes back, they let you know what happens next. The Target Help to Buy redemption process will begin at that point, and you can move forward. If you feel like you’re getting nowhere with Target Help to Buy redemption, you can also contact a solicitor for a bit of extra assistance. They can either give you a different Target Help to Buy contact number or generally help you with the Target HCA redemption process.

If your Help to Buy purchase has diminished in value, you’re not held liable for that extra amount. With this kind of loan, you only have to repay the percentage of the loan that you got at market value when you sell your home. So, you will have fulfilled your lender’s terms as long as you aren’t in arrears.

Keep in mind that you may have to provide some evidence that your home has fallen in value. The lender wants to make certain that you didn’t undersell the property knowing that you were doing so. They will, however, provide you with permission to sell your home at a lower market value if you provide them with the proof that the market has changed since you initially bought the home and it is now worth less than you originally thought it would be. As soon as you get permission to sell at a lower than market value, they’ll send you a final repayment figure which will be based on a simple math problem – deducting the current balance of your loan from the property sold price or the market value of the home (whichever one happens to be the higher figure). How much a house sold for does factor in, but they may choose the market value number instead.

What Are The Costs Involved With Selling Your Home With Help To Buy

Naturally selling any home comes with several costs, and that’s as true for homes purchased with the Help to Buy scheme as it is with any other scheme. The biggest cost is the actual repayment of the loan itself. If you haven’t already paid it off when you sell, the full amount is deducted from your profits when you sell your home.

In addition to that cost, though, you’ll also be responsible for obtaining a Help to Buy valuation on your home. You need to be sure you work with an RICS-qualified member to get that valuation. Keep in mind that Target can reject your application to sell, and one of the reasons they often do is that sellers didn’t use a certified surveyor, so be sure you select the right team to handle it. You will need to pay for these costs upfront. Typically this kind of survey costs between £300 and £900, depending on the location of your home and its size. You’ll want to move fairly quickly, as your survey is only good for three months.

In addition to the survey costs, you’ll also usually pay an administrative fee of £200 when you begin working with a Help to Buy agent.  Again, that will come before you ever actually sell your home.

How To Move Your Mortgage

If you’re buying another home, you’ll also need to think about moving your mortgage. When you initially purchased the home in which you live now, you got a Help to Buy mortgage deal that was only available on properties that worked with the Help to Buy scheme. Because of that fact, you’ll likely have to change your mortgage. Some lenders offer Help to Buy mortgages that are portable and can thus be moved to your new property, but for the most part, you’ll need a brand new mortgage, and that can mean that you’re subject to a higher mortgage rate than you’d initially expected.  The only way to find out if you can port your mortgage is to chat with your lender about it. Even if you can move it, you’ll essentially have to reapply for the same mortgage, and it can be tricky to get it if you haven’t made all of your payments on time or your income has fallen. It can also be difficult to get it if your credit score has changed significantly.

If you cannot move your mortgage, you’ll need to apply for a new one, but it is important to note that you may be subject to early repayment penalties.

Can You Get Help To Buy On Your New Home?

If you’re selling your current home that you bought with the Help to Buy scheme, you’re likely looking at other homes to purchase. Wondering if you can get a Help to Buy loan on those? The simple answer is no. Help to Buy loans are only available to first-time buyers. Help to Buy loans are only available for those over the age of 18 who can afford the fees and interest payments involved. You’re simply not eligible if you have ever owned a home in the UK or if you’ve ever had any kind of mortgage financing, including sharia mortgage finance.

More than the fact that you wouldn’t qualify for this type of help because you’ve already owned a home, though, is the fact that the entire Help to Buy scheme is ending. At present, there is no program scheduled to take the place of Help to Buy, and there is no Help to Buy houses for sale. There is a Lifetime ISA account that offers people a 25% bonus on their savings when they pay in, but it doesn’t work quite like Help to Buy or even the previous Help to Buy ISA. There are other first-time buyer programs, but none of them offers the same robust options this one did.

How To Buy And Sell A Home At The Same Time

If you are working to buy a home and sell the one you bought with the Help to Buy scheme at the same time, there are several things you should consider. Initially, have your property valued. Those homes that are properly valued from the start have a much higher chance of selling quickly than those that are priced far too high. Help to Buy means you can’t undervalue your property either, so make sure it is priced well. You can look at the figures from other homes selling around you by simply typing in terms like “house sold near me” to a search engine, but typically an estate agent can ensure that happens. From there, you’ll want to set yourself a strict budget when it comes to both the costs of buying a new home and selling your current one. In most cases, you’ll want to work with an estate agent or even a solicitor to help better estimate all of the costs involved in this process.  Remember that you’ll need to think about how much you’ll owe everyone – estate agents, conveyancing solicitors, mortgage brokers, surveyors, etc – and the other costs involved with property transactions like stamp duty. Remember to factor in the house equity you’ve built up over time, too, though. Often just calling your lender and saying, “How much equity do I have,” will help you establish that number. When you have some numbers on paper, think about exactly where you stand with your finances. Make sure this is a financially feasible move for you. You’ll want to look hard at what you have available and how much you’ll make on your home sale. There are no loans for moving house, so you’ll need to have the money in the bank before you move.

Once you’re certain this is the right way to move forward, begin preparing your home for sale. You’ll want to clean it thoroughly and completely declutter it. Additionally, you’ll need to think about making any minor repairs to your space. Adding a coat of paint or simply dressing up the front of your home to increase your kerb appeal is a must. Next, choose an estate agent for your house. Help to achieve your sales goals is likely much welcomed at this point, and an estate agent can get you there.  You’ll want someone familiar with your situation and understand how to sell your home for the most money possible. You may want to work with a Help to Buy agent who is familiar with the scheme and what must be done to sell your home. Once your home is listed, be sure to gather all of the paperwork you’ll need to sell it. You’ll want the title deed and any certificates that show you’ve had certain work done to the property. It’s also worth it at this point to go ahead and gather what you’ll need as a buyer which includes proof of your ID and your income.

Next, chat with a lender about what you can afford in a new home. They will help you prequalify for a mortgage loan so you know exactly what your budget is for your next property. You’ll want to do lots of both online and offline property searches to find the option that best meets your needs.

The final steps are a bit of a dance. If you find the right home, you’ll need to make an offer on it, but make it clear that it is contingent upon the sale of your property. If you get an offer first on your property, you’ll need to start moving more quickly to find the right home to meet your needs so you can be out by completion day. Once you have an offer and make an offer, you’ll need to work with a conveyancing solicitor to finalise the paperwork, then you can move out of your old home and into the new one!

Making Sure Your Home Sells For The Most Possible Money

The key to making sure you can repay your Help to Buy loan, whether you’re buying a new property or not, is to make sure your home sells for the most possible money, and there are several ways to do just that. Start with a deep cleaning of your home. Although your home is no longer brand new, studies have shown that most buyers expect them to look and feel as if they are. Because of that, many sellers choose to have their homes professionally cleaned before they ever actually list them. A professional team can do a great job of tidying up the areas you always forget to consider. More than that, though, they help free up your time, and as you’ve likely already realised, working to sell a home is a very busy time. More than that, though, your home will look and smell great, and it will only take a little bit of tidying to make sure that it stays that clean throughout the process.

In addition to a deep clean, you’ll want to make all of those little minor repairs to your home that you’ve been putting off for some time. For example, if you have taps that have been dripping for some time, it will likely take no time at all to repair them, but it can make all the difference in the world to a buyer. Similarly, dealing with peeling paint or badly fitted flooring in places can help sell your home very quickly.

You’ll also want to address any lighting issues you have. Replace ageing fixtures and make sure there are bright bulbs in every fixture you have in your home. You’ll also want to take steps to clean the windows both inside and out and replace any heavy drapes with light sheers. Studies have shown that homes with good lighting are homes that sell faster. If you have any darker areas of your home after you take those steps, you’ll want to add lamps or mirrors to help it feel a bit lighter in those areas.

The inside of your home isn’t the only space that needs attention, though. You need to address the outside of your home, too. Make sure the back garden is trimmed and looks like a pleasant space to spend time in. Keep in mind that you don’t want anything that looks too complicated in this space, as that can turn buyers away from your property. What you do want, however, is a space with which they can connect, a place that looks like the perfect oasis.

Your front garden should look just as amazing. Ensure the plants and lawn are carefully trimmed. You’ll want to address any possible issues with your cladding and give the front walk a good wash, too. If any other small repairs need to be made here, it’s best to do it immediately. Your goal is to create a great first impression the moment they pull up to your home.

With simple steps like these, your home is far more likely to sell for the maximum amount.

Help To Buy May Mean Selling Frustration

If you purchased your home through a Help to Buy loan, you may be concerned that you’ll face a serious battle when it comes time to sell your home. While it can certainly mean taking some extra steps if you’ve not already paid off your loan, it is possible to sell your home and repay the Help to Buy loan. Chat with Target or your solicitor to learn more about how to make it easier to sell the home that you bought with a Help to Buy loan.

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