The UK government has created the Help to Buy and Right to Buy schemes to help hard-working people like you take steps to buy your own home.

Help to Buy: Equity Loan

Right to Buy

Help to Buy: Shared Ownership

Help to Buy: Equity Loan
(2021-2023)

If you’re a first-time buyer in England, you can apply for a Help to Buy: Equity Loan.

This is a loan from the government that you put towards the cost of buying a newly built home.

You can borrow a minimum of 5% and up to a maximum of 20% (40% in London) of the full purchase price of a new-build home.

You must buy your home from a homebuilder registered for Help to Buy: Equity Loan.

The amount you pay for a home depends on where in England you buy it.

Price Caps
(April 2021 to March 2023)

Region

Max. Property Price

North East £186,100
North West £224,400
Yorkshire & 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

 

The equity loan, the deposit you have saved, and your repayment mortgage cover the total cost of buying your newly built home.

The percentage you borrow is based on the market value of your home when you buy it.

You do not pay interest on the equity loan for the first 5 years. You start to pay interest in year 6, on the equity loan amount you borrowed.

The equity loan payments are interest only, so you do not reduce the amount you owe.

You can repay all or part of your equity loan at any time. A part payment must be at least 10% of what your home is worth at the time of repayment.

London Help to Buy

To reflect the current property prices in London, the Government increased the upper limit for the Equity Loan from 20% to 40%, for first-time buyers purchasing a newly built home within Greater London.

Who is eligible?

To be eligible for Help to Buy: Equity Loan (2021-2023):

1.  You must be a first-time buyer
2.  the new build home you buy must be within the relevant regional price cap
3.  You and anyone you’re buying a home with must:
– not own a home or residential land now or in the past in the UK or abroad
– not have had any form of sharia mortgage finance.

The Help to Buy Agents will check if you’re eligible for the scheme. They use an eligibility calculator tool to check your monthly income and outgoings, including household bills and estimated mortgage repayments in the calculations.

Anyone who is married or in a civil partnership will have to make a joint application with their spouse or civil partner.

You will need to sign a legal declaration to confirm that you are a first-time buyer. Your conveyancer will explain this to you.

This scheme is available in England only. The Scottish GovernmentWelsh Government and Northern Ireland run similar schemes – check out their websites.

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Help to Buy: Shared Ownership

Shared ownership schemes have existed in various forms for years, and under the current Help to Buy scheme are available to first time buyers, people who used to own a home but can not afford to buy one now, or who are an existing shared owner looking to move. If you have a household income of under £80,000 a year (or £90,000 in London) shared ownership allows you to take out a mortgage to buy a percentage of the property (typically between 25% and 75%) and pay rent to the housing association for the remaining portion of the property, which they own.

The Help to Buy shared ownership scheme can be used to purchase either designated newly built or existing properties. Similar shared ownership schemes are available in Scotland, Walesand Northern Ireland. Alternative schemes are also available for people over 55 (Older People’s Shared Ownership) and who have long-term disabilities (HOLD – Home Ownership for People with Long-Term Disabilities).

Buying a New Build

There can be many advantages in purchasing a newly built property over an older home; a modern property with brand-new fixtures and fittings, often much more energy efficient than older houses, and usually with smoke and burglar alarms fitted. Add to this the avoidance of the dreaded “property chain”, and the sometimes generous incentives offered by property developers, and it can be an attractive proposition.

The currently available Help to Buy schemes – equity loans and shared ownership, as well as the Help to Buy ISA that is designed to help homebuyers save up for a deposit – make it easier than it has been in years to purchase a modern, newly built home.

Other Affordable Home Ownership Schemes

Although equity loans, shared ownership and the Help to Buy ISA are the only schemes currently branded under the Help to Buy umbrella, they are not the only affordable home ownership schemes out there.

Right to Buy

Are you a council tenant, or were you living in your home when the council transferred it to another landlord?

If yes, now might be the ideal time to think about buying your home.

That’s because the top discount under the Right to Buy in England has been increased. From 6 April 2019 you could get a maximum discount of up to £82,800, or £110,500 if you live in London. This amount increases every year in April in line with inflation.

A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME OR PROPERTY. YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY DEBT SECURED ON IT. THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE MOST FORMS OF BUY TO LET MORTGAGE.

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