Selling a home bought with a Help to Buy loan
Help to Buy was a significant first step for tens of thousands of first-time buyers. It provided a much-needed boost to get people on the property ladder.
But what happens when it’s time to sell that home you bought?
How does it work?
How much do you owe the Government, and when is it due?
Where does a Help to Buy Valuation come into it?
In this article, we’ll cover all this and give you the answers you need. If you have any further queries, please don’t hesitate to drop us a quick message.
What is Help to Buy?
Help to Buy was a Government buying scheme for first-time homebuyers.
It saw the Government contribute 20% of the cost of a new home (up to a maximum property value of £600,000) in the form of an equity loan. The buyer would raise 5%, leaving them to find a 75% mortgage.
It was available to new applications up until 31 December 2022, with applicants having until 31 March 2023 to exchange contracts and keys.
Because of these cut-off dates, the Help to Buy scheme no longer applies to first-time buyers looking to purchase a new home.
However, tens of thousands have used the Help to Buy scheme. The Government has an ongoing 20% stake in their homes. This will remain the case until it’s paid off.
Can you sell a home bought with Help to Buy?
You can absolutely sell a home bought with Help to Buy. However, the equity loan must be settled at the same time.
An equity loan is secured against the value of the property. As the home’s value fluctuates, the debt follows the same pattern. For example, if your house’s market worth increases by 10%, so will the amount you owe to the Government.
Selling a home you bought with Help to Buy is relatively straightforward. It’s not remarkably different from moving house under ‘normal’ circumstances. There are simply a couple of extra steps to be aware of.
Before selling your home, you’ll need a Help to Buy Valuation. This gives an accurate real-time estimate of the property’s overall value. The amount you owe the Government (20% of this figure) depends on this document (not the actual selling price).
Of course, the other necessary step is paying the loan off and proving it, which might accrue extra expenses from your solicitors. Other than that, proceed as in any standard house sale.
You could also consider paying the equity loan off at two other points:
- When remortgaging for a better rate
- If you want to pay the loan off in cash to counter a rapidly rising house price index
Why is a Help to Buy Valuation necessary?
You need a Help to Buy Valuation before selling your home, so the Government has a trusted account of your home’s actual value. This will be submitted to them along with your fee as proof that you’ve paid your debt off.
A RICS Help to Buy Valuation is much the same as a standard valuation. A chartered surveyor inspects your home and concludes its market value based on the following (and more):
- General condition
- Area and location
- Land
- General desirability
- Extensions
- Renovations
- Future developments in the area
After the survey, the RICS surveyor will send you their report (usually as a PDF to save paper). This can take up to two weeks. Once you receive this, you’ll have three months to pay off the 20% equity loan.
This will happen as part of the house-moving process. It’s best to get the survey completed once you’ve accepted an offer, in case your home takes a while to sell and for the deeds to go through.
Valuations provided by estate agents don’t apply here because they’re focused on maximising the selling price.
GB Home Surveys provides Help to Buy Valuations
Based in the South-West, South Wales and the West Midlands, GB Home Surveys is here to help. We regularly conduct Help to Buy Valuations to give homeowners that much-needed hand when it’s time to move on.
Although the industry standard is two weeks, you can expect our Help to Buy Valuation PDF report within seven days. All our chartered surveyors are, of course, RICS members. We trust our employees to complete the job quickly, professionally, and accurately.
As a business made up of local teams, our staff know the areas they work in like the backs of their hands. As such, they have a second-to-none perspective regarding how regional trends and regulations impact your home’s value, something large corporations simply can’t offer.
Could you use a reliable Help to Buy Valuation service? If so, we’d love to hear from you. Use the contact form below to get in touch for a commitment-free, friendly chat, and we’ll get straight back to you.
