Help To Buy
What is Help to buy?
Help to Buy is an equity loan assistance for new build properties in England.
Help to Buy is available to all buyers, not just first time buyers who wish to own a brand new home.
A maximum loan of 20% in England (40% in London) of the full purchase price is available to the purchaser an equity loan funded by Homes England on behalf of the Government.
The scheme is available in England from registered House Builders. The Initiative will run until 2021 (it may close sooner if all funding is used before 2021).
How Does Help to Buy Work?
The scheme helps buyers to purchase a new property funded by a mortgage and an equity loan.
The mortgage lender will require that you contribute a deposit (minimum of 5% of the full purchase price).
In England, your contribution to the purchase price via a conventional mortgage and deposit must be a minimum of 80% (60% in London). With the remainder being funded through the equity loan assistance.
What Fees Do I Pay to Homes England?
By providing the equity loan Homes England has an entitlement to a share of the future sales proceeds equal to the percentage contribution required to assist your purchase.
Monthly Management Fee: A £1 monthly fee is payable from the start of the equity loan until the loan is repaid in full.
After the first 5 years: The loan will be subject to an additional interest fee of 1.75% per annum on the outstanding amount of the equity loan. This will increase every year by the increase (if any) on RPI plus 1%.
Management fee and interest fees are NOT capital repayments
How Do I Pay Back the Equity Loan?
You can choose at any time to make a voluntary part repayment of the equity loan at the current market value. The minimum voluntary repayment amount is 10% of the market value at the time you make the repayment.
If you decide to sell your home you must repay the equity loan from the proceeds of the sale. If your equity loan was a 20% contribution, your repayment will be 20% of the total market value when it is sold.
Am I Eligible?
The property purchased must be your only residence
You cannot rent out your existing home and buy a second home through Help to Buy.
It must be used for the purchase of a new build home.
You must be able to fund 80% (60% in London) of the chosen property through a conventional mortgage and deposit.
Your must be able to provide a minimum deposit of 5% of the total purchase price.
The maximum purchase price is £600,000.