Help to Buy - Equity Loan
Help to Buy - Equity Loan is designed to help you buy a newly built home from a participating registered developer, whether you are a first time buyer or an existing homeowner. Unlike previous schemes, there is no upper income cap for buyers.
The Government will give you an equity loan of between 10% - 20% of the value of your property to help you buy. There is no interest to pay on this loan for the first five years.
The equity loan will be a 2nd charge on your property and will represent a percentage of the value of your property. So when you pay back the loan, you will pay it back as a percentage of the current market value of your home. For example:
Your home cost £200,000 when you bought it and you had a 20% equity loan of £40,000
If your home is worth £300,000 when you sell it, you will pay back 20% of £300,000 ie £60,000
Your loan must be paid back either when you sell your property or at the end of 25 years, whichever is sooner.
You will need a conventional mortgage from a qualified lending institution and a minimum deposit of 5% (subject to lender requirements). Don’t forget that you will also need enough money to pay for your legal fees, costs of moving, and stamp duty (where applicable).
Your Help to Buy - Equity Loan home must be your main residence – you cannot use this scheme for Buy to Let.
How do I find a Help to Buy - Equity Loan property?
Help to Buy - Equity Loan properties are available from participating registered developers. Properties up to a value of £600,000 can be included in the scheme. You can find details of registered developers offering Help to Buy - Equity Loans in our operating areas here Finding Help to Buy Equity Loan properties
How do I apply for Help to Buy - Equity Loan?
You do not need to complete the Help to Buy Midlands application form if you are only interested in applying for Help to Buy - Equity Loan. Once you have found a suitable property (newly built from a participating registered developer), you will need to follow these steps:
- Fill in a Property Information Form PIF April 2014 [pdf] 150KB PIF April 2014 [doc] 403KB (or obtain one from a registered developer).
- Complete the relevant reservation paperwork with the registered developer.
- Submit both forms to Help to Buy Midlands by emailing them to us at firstname.lastname@example.org (or post to us at Help to Buy Midlands, Garden Court, Harry Weston Road, Binley, COVENTRY CV3 2SU).
- We will issue a document called an Authority to Proceed. NOTE – please do not apply for a mortgage prior to receiving this document
- Your Authority to Proceed will then outline the next steps – please ensure you have read the Help to Buy “Buyer’s Guide” Help to Buy buyers' guide [pdf] 287KB
At present part exchange is not available on the Help to Buy - Equity Loan scheme. Your Help to Buy - Equity Loan property must be your only property by the time of purchaser legal completion.
I am a developer wishing to register for Help to Buy - Equity Loan funding
If you are not already signed up for funding, you can find the registration document and submission forms at http://www.homesandcommunities.co.uk/help-to-buy.
Developers can contact the HCA regarding Help to Buy at email@example.com. Please note this e-mail address is only for developers with queries relating to Help to Buy - Equity Loan, not for general enquiries.
Help to Buy Mortgage Guarantee scheme
The Help to Buy Mortgage Guarantee Scheme will be available from 07 October 2013. The scheme will not be administered by Help to Buy Agents but you can find out more at the HM Treasury website: www.gov.uk/government/organisations/hm-treasury
Please click here for: Help to Buy: Equity Loan and Mortgage Guarantee scheme guidance [pdf] 531KB
Information about getting a mortgage
In addition to going to an Independent Financial Advisor, applicants can seek information from the Money Advice Service. Click here.