What is a Help to Buy: Equity Loan?
A Help to Buy: Equity Loan is a government scheme that is available on new-build homes to both first time buyers and home movers and can provide extra money towards your deposit so you can obtain a mortgage with a deposit from as little as 5%.
As long as you're buying a new-build home and meet the scheme's eligibility criteria you can apply for a Help to Buy: Equity Loan for up to 20% of your home’s purchase price in England and Wales and 40% in London.
You'll then only need a minimum deposit of 5% and raise the rest of your home's purchase price through a mortgage.
Example of an equity loan
Example house value (100%)
5% buyer’s deposit
20% Help to Buy loan
In England and Wales, all Help to Buy: Equity Loans are interest free for the first five years of owning your own home, although you can start repaying the loan whenever you want to. After that, you’ll need to pay a monthly interest fee on top of your monthly mortgage repayments. If you sell your home you'll need to repay any outstanding balance on your equity loan.
If you are looking to buy your home using the Help to Buy: Equity Loan scheme, you will need to contact the Help to Buy agent in your area. Details about your local agent and other information about the scheme can be found by visiting the government’s Own Your Home website.