Can you sell your home bought with help to buy equity loan?

Last updated: August 2021 | 4 min read

Yes, you can sell your home bought with help to buy equity loan. You just have to pay the loan off when you sell your home, excluding the amount you have already paid off.

What is Help to Buy Equity Loan?

Help to Buy Equity Loans are governmental schemes to help you get onto the property ladder. It is available for those who want to purchase a new build property. As long as the new build property is worth under £600,000, you will get a loan up to 20% of the value of the new build. You are responsible for submitting at least a 5% deposit and arranging a mortgage for the remaining 75%.

Click here if you want to know more about Help to Buy Equity Loan Scheme.

If you want to find out how much discount you will get, you can use this calculator.

When do you have to pay off the loan?

Help to Buy Equity Loans become repayable after 25 years or at the time you sell your home. This means that upon completion, you will first pay off the remaining amount of the loan. You way wish to read up on what happens on completion day to understand the other obligations you have.

How to sell your Help to Buy home?

You can market it, in the same way as if it were not bought with Help to Buy Equity Loan. Click here if you want to know more about the steps of selling your home.

However, you will need to get in contact with Target Group – a firm used by Homes England for all administrative tasks relating to Help to Buy Equity Loan.

What to do when you receive an offer?

When you receive an offer, you will first have to get your home valued by a chartered surveyor.

Then you must let Target know the offer you have received and that you are getting your home valued.

Target will get in touch with you when they receive the surveyor's valuation report and will provide you with further instructions.

What about your mortgage?

In all probability, your mortgage lender provided you with a mortgage deal which is specifically for Help to Buy properties. Help to Buy mortgage deals are usually not portable. Therefore, you should first confirm this by checking out your mortgage paperwork.

If your mortgage deal was portable, it could be moved to your new home.  You will continue on a mortgage on the same rates as the original.

If your mortgage is not portable, then it cannot be moved to your new home. You will require a new mortgage deal rather than continuing on the original rates.

Some lenders do offer a refund on early repayment charge, subject to some conditions if you take another mortgage deal with them.

What is the cost of selling a Help to Buy Equity Loan home?

  • Equity Loan – You first have to pay the remaining amount left on your equity loan. This amount is calculated as a percentage of the agreed sale price or the current market value, whichever is the highest.
  • Survey cost – You have to get a survey done by an RICS qualified member. You will incur a fee for this.
  • Administrative fee – You will be charged an administrative fee, usually, a couple of hundred pounds when your request to repay the loan will be submitted.

Bear in mind that once you receive the valuation figure, it will only be valid for 3 months. This means that you have to repay the loan within that period. For some reason, if you cannot repay the loan within that period, you will have to apply for another valuation or apply for an extension.

Has your home fallen in value?

The Help to Buy scheme is beneficial because the valuation figure is calculated on the agreed sale price or the market value. Therefore, provided that the valuation report is approved, you are not liable to cover any shortfall in the loaned amount.

Please note that you may be asked to provide evidence that you have not willingly undersold your home. Once permission is granted to you, the repayment amount is calculated t by deducting your remaining mortgage balance from the market value or sale price.

Click here to find out more about the cost involved in selling your home.

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