What is a Help to Buy Equity Loan?

Under this support scheme from April 2021, first time buyers can borrow up to 20% of the cost of a new build, or 40% in London.  You would need to pay at least 5% of the deposit towards the property and would be required to use a repayment mortgage for the remaining 75%.  This loan is interest free for the first five years, after which the interest fees start at 1.75% and the interest fee will increase each year based on the Retail Price Index. 

The loan is not able to be used on buying a property that you intend to rent out.

New build properties only are eligible for the Help to Buy Equity Loan, and there are also price caps to consider, which are as follows:

If you are interested in a particular new build property, you should check with the homebuilder that they are registered for the scheme before you apply.

Before you have even committed to looking for a property, we can advise you as to whether this is the right option for you to help you onto the property ladder based on your own personal situation.  We can discuss with you whether other options may be more beneficial for you, such as shared ownership or a Lifetime ISA for example.

If you decide to go ahead with the Help to Buy Equity Loan and are successful in securing a property, we will work with you following receiving the Authority to Proceed from the Help to Buy agent.  After this point, our role will include the following:

• As part of your purchase transaction we will report to you on the content of the Equity Loan and obtain your signature to the loan deed and a First Time Buyer’s Declaration.
• Prior to exchange of contracts we will request an Authority to Proceed from the Help to Buy Agent which is a document authorising us to exchange contracts.
• After the purchase has completed, we will complete the Registration of completion of your purchase and Equity Loan at the Land Registry and send the title deeds to you.

You will only be required to pay back the loan when you pay off your mortgage, sell the property or come to the end of the loan term, which is normally 25 years.  You can pay off all or part of your loan before then. 

It is important before committing to the Equity Loan that you understand the repayment terms; the amount you borrow is a set percentage of the value of the property.  Subsequently, the amount you will be required to pay back will be the same set percentage of the value of your home at the time, which may be more or less depending on whether the value of the property has increased or decreased.  If you are selling your home before the end of the loan term, you will need to repay your entire equity loan.