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Selling your home on a Help to Buy mortgage?

Tuesday August 1, 2023

Do you have a Help to Buy mortgage and are thinking of selling your home or re-mortgaging?

If you are one of the thousands of home owners who have a Help to Buy Mortgage, you may have seen recent press coverage about issues regarding changes in the scheme. If you are currently looking at selling your home or remortgaging, this is possibly causing you some concerns.

As a leading North West Law Firm, AFG have put together a summary of exactly what is happening, how this might affect you – and what you can do about it. AFG Law’s Dominique Oliviero explains more.

 

What are Help to Buy Mortgages?

The Help to Buy scheme was launched to assist first time buyers get their foot on the housing ladder, by offering an equity loan in which the government lends money to buy a newly built home. This must be used to buy their main residence – not a second home or a buy-to-let property. They need a deposit of at least 5% of the purchase price.

Borrowers with the loans, which are interest-free for five years and designed to help people with small deposits afford a property, must pay them off when they move home.

 

What are the current challenges?

The government agency in charge of the scheme, Homes England, switched administration to a company called Lenvi who took over from Target back in June.

It has been reported this week that due to a huge backlog, home-owners with such a mortgage are waiting up to 4 months for the necessary paperwork to sell or re-mortgage their home. This is leading to:

  • Many home-owners having to pay much higher interest rates as a result of the delays
  • Facing massive delays selling their home.

In these challenging times, this obviously isn’t an ideal situation.

 

What can homeowners do?

On the face of it, very little – it looks set to be a waiting game for thousands of people. There are, however, a few steps that might ease the process along for people going forward

 

  • If you have a Help to Buy mortgage and are thinking of selling your property or re-mortgaging at some point in the future, we would strongly advise that you make contact with Lenvi now to start the ball rolling.

 

  • Lenvi will require their own valuation to be carried out on your property before they will issue a redemption statement detailing the balance to repay the mortgage. You will need to pay for this. Please note that this valuation will remain valid for 3 months. If your sale or re-mortgage has not completed within that time you will need to pay for a further valuation.

 

  • Make contact with your solicitor sooner rather than later. It is important that you make your solicitor aware during your initial conversation that you have a Help to Buy mortgage and provide them with the details of this, including your account number. Your solicitor can then get in touch with Lenvi to ask that they provide them with the necessary paperwork asap.

 

If you need further advice on the current situation, contact property@afglaw.co.uk for further information or call us on 01204 920108. 

 

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