The new Help to Buy: Equity Loan (2021-2023) scheme
What is it and how does it work?
The low down…
Basically, the government will loan home buyers up to 20% (40% in London) on the cost of a new build property only.
You will still need a minimum of a 5% deposit or more and to arrange a mortgage of 25% or more to make up the rest. The loan by the government is interest free for the first five years, but you will be charged an increase in interest per year thereafter.
Fact: Help to Buy has already helped a whopping 270,000 by 2021 sadly this scheme is set to end in March 2023, so going with a mortgage advisor such as MTGE who understand the Help to Buy process can help speed things along…Oh and remember we do not charge you a broker free either.
So where can you find a new development that is support by The Help to Buy Scheme near you?
Click on the link and pop in your postcode to find government approved builds near you: https://www.newhomesforsale.co.uk/
How much can you borrow with The Help to Buy Equity Loan?
How much you can spend on a new property is actually capped by region due to the variation in property prices.
- In the North East property pricing is capped at £186,100
- North West £224,400
- Yorkshire and Humberside £228,100
- East Midlands £262,900
- West Midlands £225,600
- East of England £407,400
- London £600,000
- South East £437,600
- South West £349,00
(Keep an eye on the government site for up to date details, as these price caps may change: www.helptobuy.gov.uk/equity-loan )
The most important thing to remember is this the Equity loan supplied if approved is only 20% of the property value (40% in London), this means you still need a deposit of a minimum of 5% and to be able to prove you can afford to pay back the loan of the additional amount required for a mortgage on the property too. Make sure you understand the amount of interest you will be paying back on both the government loan (free interest for the first 5 years) and the mortgage loan.
How does the interest rate increase on the Help-to-buy Equity Loan?
As mentioned, you pay nothing for the first 5 years, thereafter your interest will increase by 1.75% rise each year by the Consumer Price Index including owner occupiers housing costs (CPIH) plus 2%. You also pay a monthly management fee of £1 for the duration of your loan. Homes England secure the equity loan as a second charge on Your Help to Buy home.
A good mortgage broker will make you aware of all the fees you are legally required to pay and will guide you through every step of the process from application to completion. You should be made aware of all expenses relating to your loan and mortgage. Please note conveyancing and solicitor fees are charged separately.
For more details on how the Help to Buy Government Equity loan scheme works click on the link below today: www.helptobuy.gov.uk/equity-loan
If you are still unsure whether you can qualify for a Help to Buy Equity alone all you need to do is drop us a line or give us a call and we will see if we can help you buying that dream home a reality.