Help to Buy Scheme in England

Artist's Impression

How does the Help to Buy Equity Loan work?

  • Help to Buy Equity Loan is available to all homebuyers, not just first time buyers.
  • You only need a minimum 5% deposit to qualify.
  • The Government will lend you up to 20% of the value of your property through an equity loan. The loan can be repaid at any time or on the sale of your home.
  • You will only need to secure up to a 75% mortgage from a bank or building society.
  • Help to Buy Equity Loan is only available on new build homes
  • There is a maximum home purchase of £600,000 in England

Frequently Asked Questions

Q) What is Help to Buy?
A) Help to Buy is made up to two distinct schemes – the “equity loan” and “mortgage guarantee”.

Q) How does the Equity Loan work?
A) Buyers will be provided with an equity loan from the Government of up to 20% of the value of the property. This will be interest free for the first five years.

Q) What happens after the five years?
A) After this period, a fee of 1.75% is payable on the equity loan, this will rise by RPI inflation plus 1%.

Q) When will I have to pay back the loan?
A) The loan can be repaid at any time within the first 25 years (or the terms of mortgage), or alternatively on the sale of the property.

Q) Why has Help to Buy been set up?
A) The Government is continuing its pledge to help more people across the UK become homeowners. It is also concerned with increasing the supply of low-deposit mortgages and new housing.

Q) Am I able to buy a house under the new scheme?
A) If you can raise a 5% deposit you will be able to buy a new home under Help to Buy (subject to a mortgage being approved by a lender).

Q) What is the maximum property purchase price?
A) The maximum home purchase price is £600,000 in England.

Q) Is the scheme just for first-time buyers?
A) Help to Buy is available for both first-time buyers and existing homeowners.

Q) Can I use Help to Buy for a buy-to-let property?
A) No, the scheme is only available on properties that will be occupied by the person or persons who have taken out the mortgage.

Q) Am I able to get an interest only mortgage using Help to Buy?
A) No, the scheme is only available in relation to capital repayment mortgages.

Q) When did the scheme start?
A) The equity loan element of Help to Buy came into operation on 1 April 2013 for England.

Q) Why does the required customer deposit percentage vary?
A) Each lender has its own lending criteria and may accept different deposit levels and will charge different interest rates. Please contact your IFA (independent financial adviser) who will help to work out the best option for you.

Telephone 01377 271167 for further details or to arrange a site visit.

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