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Help to Buy Equity Loan (2021-2023)

 

The new Help to Buy scheme was announced in November 2020 and is available to first-time buyers wishing to purchase a new build property in England. Applications for the scheme opened on 16th December 2020 however, you will not be able to move into your new home until 1st April 2021 when the scheme officially launches and replaces the old Help to Buy: Equity Loan scheme (2013-2021).

 

What is it?

A Help to Buy: Equity Loan is a loan from the government that you can put towards buying a new build home. You can borrow a minimum amount of 5% of the property’s market value and a maximum of 20%. The maximum loan amount increases to 40% in London due to the significantly higher property prices in comparison with other regions across the country. You will need to secure a mortgage for the percentage that your deposit and Help to Buy: Equity Loan does not cover.

 

Am I eligible?

The new Equity Loan scheme has a range of criteria that you must meet to be eligible. Firstly, you must be a first-time buyer, whereas previously the scheme was also available to home movers, and you must be able to pay at least a 5% deposit. The property you wish to purchase must also be a new build and the builder must also be registered for the Help to Buy: Equity Loan scheme to enable you to take advantage of these benefits. Lastly, the new build home you wish to buy must fall into the regional price cap categories as set out by the government.

Region Maximum property price
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

 

 

What interest will I have to pay?

For the first 5 years you do not pay interest on the loan, you simply have to pay a £1 monthly management fee. In year 6, you start to pay interest on the amount that you borrowed for the Help to Buy: Equity Loan. This monthly interest fee is 1.75% of the loan amount and it will increase each year in line with the Consumer Price Index (CPI), plus 2%.

 

How do I repay the loan?

You can repay all of the loan or part of it at any time however, a part payment must be equal to at least 10% of your home’s market value at the time of repayment. The amount that you will pay back is calculated as a percentage of your property’s value at the time you make the payment. For example, if the value of your home increases you will pay back more than you originally borrowed. In contrast, if the value of your home decreases you will be required to pay back less than your original loan amount.

For more information on the Help to Buy: Equity Loan, please visit the GOV website.

Here at Chancellors we have a range of brand new properties for sale, from apartments to detached houses. If you would like to see the new build homes that we have to offer click here. Please note that not all properties available to view here will be available on the Help to Buy: Equity Loan scheme. Please discuss this with your agent to ensure that the property you are enquiring about is suitable for your needs.

Correct at time of publication (16/02/2021). The views and opinions expressed herein are those of the individual contributor and do not necessarily reflect those of the Chancellors Group of Estate Agents Ltd or its subsidiaries. References to legislation, best practice and other matters with legal implications such as fees, rules and processes are included for information and editorial purposes only and are not authoritative, nor should they be interpreted as advice. When in doubt you should only take advice from an industry professional or solicitor where appropriate. E&OE.

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