Help To Buy Equity Loan Scheme
The equity loan scheme is available to all buyers as long as they are looking to buy a new build property. The purchase price of the property mustn’t be over £600,000 and the scheme allows the buyer to borrow 20% of the property price on an interest-free loan for a period of five years. This means that for a 5% deposit, an applicant can obtain a 75% mortgage, making it more likely they will be accepted and that they will be able to afford the process.
For people looking to buy in London, it is possible to borrow up to 40% of the price of the property.
How does Help to Buy work in the UK
Scotland – If you want to buy a new build home but can’t afford the total cost, you might be able to get help through the Help to Buy Affordable New Build scheme. The scheme is open to first time buyers and existing homeowners and helps you with up to 15% of the purchase price of a new build home. You may only buy a new build home from a builder who is registered with the scheme. The Scottish Government has a list of participating home builders. You also have submit your application no more than 9 months in advance of the date you expect to finish buying the property.
Wales – Help to Buy – Wales provides a shared equity loan to buyers of new-build homes. The scheme supports the purchase of homes up to £300,000 bought through a registered Help to Buy – Wales builder.
Northern Ireland – This scheme intends to make it easier for people who only have a 5% deposit to buy a house. The government offers a guarantee to lenders that they will insure 15% of the value of the mortgage if the home buyer fails to pay and the property is repossessed. This mortgage guarantee scheme closed to new applicants in December 2016, but many lenders continue to provide 95% mortgages. A 95% mortgage will normally have much higher interest rates and can also be a risky prospect as the borrower could end up owing more than the property is worth if the value of their home falls even slightly. It may be worth thinking about finding a more affordable home or trying to save a larger deposit before you commit to buying a property.
England – With a Help to Buy Equity Loan, the Government lends you up to 20% of the cost of your newly built home, so you’ll only need a 5% cash deposit and a 75% mortgage to make up the rest. You won’t be charged loan fees on the 20% loan for the first five years of owning your home.
Example of Help to Buy Calculator
| Cost name | Percentage of total | £ value |
|---|
| Your deposit | 5% | £10,000 |
| Equity loan | 20% | £40,000 |
| Mortgage | 75% | £150,000 |
| TOTAL | | £200,000 |
How much deposit do I need for help to buy?
With a Help to Buy Equity Loan, the Government lends you up to 20% of the cost of your newly built home, so you’ll only need a 5% cash deposit and a 75% mortgage to make up the rest.
Can you get help to buy on any house?
The Equity Loan part of Help to Buy only applies to properties worth up to £600,000. Unlike previous schemes, there is no maximum income requirement, but the property must be a new-build home.
How much deposit do I need for a £150,000 house?
In the current mortgage market, you’ll need a deposit of at least 5% of a property’s value to get a mortgage. A lender would then lend you 95% of the property’s value. So, if you wanted to buy a £150,000 property, you would need to save up at least £7,500 and borrow £142,500.
