Help To Buy – Equity Loan

We understand that the Help to Buy: Equity Loan scheme has been instrumental in helping many individuals, particularly first-time buyers, get onto the property ladder. Even though the scheme's cut-off date was in March 2023, we continue to offer support and guidance to those who initiated purchases under this scheme.

Here's a straightforward breakdown of the Help to Buy Equity Loan:

  • Who can participate?: The scheme is open to first-time buyers and existing homeowners looking to buy a new-build property. To qualify, the property's price must fall within specific regional limits, and the buyer should not already own another property.

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  • What is it?: The government lends buyers a certain percentage of the property's value as an equity loan. The exact amount depends on where the property is located. In most areas, the loan is up to 20% of the property's value (40% in London). This loan helps boost the buyer's deposit, making it easier to secure a mortgage.

  • The buyer's part: To proceed, the buyer needs a minimum deposit of 5% of the property's value. When combined with the government's equity loan, this creates a more substantial deposit, improving the chances of getting a mortgage with better interest rates.

  • Interest-Free Period: For the first five years, the government's equity loan doesn't have interest charges. During this time, the buyer only needs to make monthly mortgage payments. After five years, interest charges start applying to the equity loan.

  • Repayment: The equity loan must be repaid in full when the property is sold or at the end of the mortgage term, whichever comes first. The repayment amount depends on the current market value of the property, not the original loan amount. This means the repayment amount can change based on property value fluctuations.

  • Moving House: If the homeowner decides to move while still having the equity loan, they need to repay it using the sale proceeds. They can repay the whole equity loan or a percentage based on the property's current market value.

Keep in mind that the Help to Buy Equity Loan follows regional price caps and specific eligibility criteria. The scheme has time limits and might have designated end dates. For up-to-date information and assistance, it's advisable to consult with a mortgage adviser or check the official Help to Buy website.

A mortgage is a loan secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.