Help to Buy: Equity Loan 2021 - 2023
Just imagine yourself in your very own first home. This Government scheme could be just the help you need to move into a brand new home you can call yours.
What is Help to Buy & how can it help you?
Help to Buy: Equity Loan scheme is available to first time buyers on new-build properties in England*. How much you can spend on your home will depend on where you’re buying.
- If you’re an eligible first-time buyer, the Government will lend you a minimum of 5% and up to 20% (or up to 40% in London) of the market value of your newly-built home.
- You pay a deposit of 5% of the purchase price of your new home at exchange of contracts, and arrange a repayment mortgage of at least 25% of the purchase price of your new home.
- You won’t be charged interest on the equity loan for the first 5 years. Interest fees start at 1.75% and rise each year in April by the Consumer Prices Index (CPI) plus 2%. You pay a monthly management fee of £1 for the life of the equity loan.
- An equity loan is secured against your property in the same way as a repayment mortgage. You must repay the equity loan when you sell the home, pay off your repayment mortgage or reach the end of your equity loan term. But, you can repay all or part of the equity loan any time before then.
To find out more about the scheme and how to apply, download the homebuyers guide to Help to Buy: Equity Loan (2021-2023)
Help to Buy FAQs
How long is the current scheme available for?
Help to Buy: Equity Loan, which is open to first-time buyers only, will end in March 2023. For more information, visit the Government's dedicated webpage.
Where are the schemes available?
The Help to Buy: Equity Loan scheme is available across most Charles Church developments in England where our homes fit the price cap criteria.
Can you clarify the equity loan element?
The equity loan is interest-free for the first 5 years. There will also be a £1 monthly management fee by Direct Debit.
From year 6, you’ll pay a monthly interest fee of 1.75% of the equity loan. Interest fees will rise each year in April by the Consumer Price Index (CPI), plus 2%. You’ll continue to pay interest until you repay your loan in full plus the £1 monthly management fee.
What are the repayment terms of equity loans under the Help to Buy scheme in England?
You must repay the equity loan when you pay off your repayment mortgage, sell your home or reach the end of your loan term, normally 25 years.
You can pay off your equity loan in full any time before then or make part payments. Your first part repayment will need to be at least 10% of what your home is worth at that time.
Are equity loans under the Help to Buy scheme in England available on pre-owned homes?
No, this scheme is only available on new-build homes like those built by Charles Church.
Can I use Help to Buy: Equity Loan if I already own a home?
No - this scheme is only available to first-time buyers. If there are joint applicants then both must be first-time buyers.
You must check that you satisfy the qualifying criteria to be first-time buyer under the scheme. For example, you and anyone you’re buying a home with must not own a home or residential land now or in the past in the UK or abroad or have had any form of sharia mortgage finance.
Are equity loans under the Help to Buy scheme in England available under a buy-to-let option?
No - this scheme is only available to purchasers using the property as their main residence.
What types of mortgage are available with equity loans under the Help to Buy scheme?
You must arrange a repayment mortgage.
Where can I get independent financial advice?
Charles Church can put you in touch with a list of recommended independent financial advisers who can assist you every step of the way.
Professional Help to Buy agents will help you to apply for an equity loan if you’re eligible and can afford the equity loan on top of your other outgoings. You can find your Help to Buy agent at www.helptobuy.gov.uk/equity-loan/find-helptobuy-agent
Terms & conditions of Help to Buy
**Help to Buy: Equity Loan (2021-23), England is available subject to eligibility, terms and conditions. First-time homebuyers who meet affordability and lending terms can borrow an equity loan of up to 20% (40% in London) of the sale price of a new build home. How much you can spend on your home will depend on which region it is in. North East £186,100; North West £224,400; Yorkshire and the Humber £228,100; East Midlands £261,900; West Midlands £255,600; East of England £407,400; London £600,000; South East £437,600; South West £349,000. You must fund at least 80% (60% in London) of the sale price with a mortgage and at least a 5% deposit.
To qualify for the Help to Buy: Equity Loan 2021-2023 programme, you must be a first-time buyer, meaning purchaser(s) who have not (either alone or with others): previously acquired via purchase, gift, trust or inheritance and major interest in a dwelling or an equivalent interest in residential land situated anywhere in the world; and/or benefited from any form of sharia mortgage finance. If the Eligible Dwelling is being bought by more than one individual, all purchasers must be first-time buyers.
Pay no interest on the loan for the first 5 years. Interest fees start at 1.75% and rise each year in April by the Consumer Prices Index (CPI) plus 2%. You pay a monthly management fee of £1 for the life of the loan. Homes England, the lender, secures the equity loan as a second charge on your Help to Buy home. You must repay the equity loan when you sell the home or pay off your mortgage. You can repay all or part (10% to 30%) of the loan any time before then. An independent financial adviser and a solicitor may be able to help you decide if Help to Buy is right for you.
A professional legal adviser is required to carry out the legal formalities of buying the home and to represent your interests. Charles Church can provide you with a list of recommended solicitors and/or financial advisers as necessary. Charles Church cannot advise you on a mortgage. Your home may be repossessed if you do not keep up repayments on your mortgage, equity loan or other loans secured against it.
OUR STAR RATING
We’ve been awarded a four-star rating by the Home Builders Federation in their 2020 survey.