Are you considering using the Help to Buy Equity Loan scheme to buy your first home?
Here are the essential things you need to know. The latest government Help to Buy scheme started in April 2021 and runs until March 2023.
What are Help to Buy Equity Loans?
Launched by the government in 2013, Help to Buy Equity Loans are aimed at helping those who are struggling to get on the property ladder.
In a nutshell, with the Help to Buy Equity Loan scheme:
- The government will lend you up to 20% of the cost of a new build home. This increases to up to 40% of the cost if the property is in London. This is called an equity loan.
- You’ll need to save a minimum of 5% of the purchase price as a deposit, and you can use contributions from your Help to Buy ISA or Lifetime ISA to pay this. The remaining 75% comes from a specialist Help to Buy mortgage product.
- As you’ll have a larger deposit, you won’t need to raise as much of a mortgage. This means your initial mortgage payments will be lower. It should also help with affordability calculations when you apply for your mortgage.
- The equity loan is interest-free for the first five years and you don’t need to make any repayments on it during that time.
- The latest scheme is only open to first-time buyers.
- It’s only available on new build homes
- Regional price caps apply (see table below).
| Region | Price Cap |
| South West | £349,000 |
| West Midlands | £255,600 |
| London | £600,000 |
| South East | £437,600 |
| East of England | £407,400 |
| East Midlands | £261,900 |
| Yorkshire & The Humber | £228,100 |
| North West | £244,400 |
| North East | £186,100 |
What are my other options?
While Help to Buy has been popular with first-time buyers, it’s not the only route available if you have a small deposit.
Shared Ownership
Also known as ‘part-buy, part-rent’, this scheme allows you to buy a share of a property and pay rent on the rest. And as you’ll only need a mortgage for the share you’re purchasing, you’ll need a much smaller deposit than if you were buying the home outright
Guarantor mortgages
This is when a parent or close family member uses their own property or savings as security against your loan. This means lenders may accept a smaller deposit than usual and sometimes they won’t require any deposit at all
For more information about the Help to Buy Equity Loan and other government schemes, book an appointment to speak with one of The Property Centre’s in-branch Mortgage Advisers. With access to over 12,000 products from 90 UK lenders, they can also help to find you the right mortgage for your circumstances, whilst ensuring you’re not paying more than you need to.
