The Equity Loan part of the Help to Buy scheme can help if you are looking to buy a brand new property. This is the first part of the scheme which has been in action since April 2013. This makes it possible for people with a 5' deposit to achieve a 75% mortgage with a 20% loan from the government.
This means people who want to buy their first home or move up the property ladder but only have a small deposit have access to lower interest rates because they would only need a 75% mortgage after the government have provided them with a further 20% loan towards their deposit.
How it works
With this part of the scheme the government will lend you 20% of the purchase price of the new build property. It is available on properties in England up to the value of £600,000. The loan is interest free for the first 5 years and after this 1.75% of the loans value will be charged and will increase each year by 1%.
Although the Equity Loan scheme is widespread now across new property developments, it is not available on all new build properties and you will have to check with the developer whether they are taking part in the scheme and the homes are eligible.
On the sale of your property you will be required to pay back 20% of the sale price to the government. You are able to sell your home at any time. You can also pay back part or all of your loan at any time, the minimum payment is 10% of the current value.
You will not be able to sublet a property purchased using the equity loan, or use it in conjunction with a part exchange deal on your existing home,=.
Use the calculator on the right to work out what you could afford.
Get in contact with us for a Help to Buy conveyancing quote. Or fill out our quick quote form on the home page.
Click here to read about the second part of the scheme – Mortgage Guarantee.