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.
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.
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.
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 Government, Welsh Government and Northern Ireland run similar schemes – check out their websites.