Equity Loan

A Help to Buy Equity Loan is available to first time home buyers and homeowners looking to move into a newly built home with a price of up to £600,000.

The Government will lend you up to 20% of the cost of this home and you won’t be charged fees on this loan for the first five years of home ownership. This means you will only need a 75% mortgage and a 5% cash deposit to buy your new home. This scheme is only available in England.

For example, if you wanted to buy a home worth £210,000, you’d receive an Equity Loan of £42,000, pay a cash deposit of £10,500 and your mortgage would be £157,500.

You are only eligible for an Equity Loan if you do not own any other property at the time you buy your home. You will not be permitted to sublet this home or enter a part exchange deal on your old home. Standard rules and procedures for Stamp Duty Land Tax (SDLT) apply to any purchase made with an equity loan, which is payable at the time of purchase on the full price of the home.

To ensure you make your home purchase on a sound basis, your main lender’s mortgage must be a repayment loan with interest and capital repaid every month and that your mortgage is valid through to legal completion.

You are permitted to use funding from public sector bodies such as your council or Housing Association to purchase your home, provided that the body is satisfied that their funding is compatible with the Help to Buy scheme and that the purchase is good value for money.

Homes that are eligible for purchase with an Equity Loan may still be under construction, as they are normally on new developments. Even if you are unable to move in at the time of purchase, you will be expected to arrange a mortgage and exchange contracts within one month of paying your reservation fee. The house builder who is building your home is the first point of contact for any progress updates or complaints about delays in construction.

While new homes generally come with a guarantee that covers particular faults, you as a homeowner will be responsible for maintaining and repairing your property. Your solicitor or conveyancer will be able to advise further on guarantees that cover defects in the house builder’s workmanship. 

How to apply?

Fraudulent claims for assistance will render the applicant liable to criminal prosecution and will require the immediate repayment of the equity loan.

For more information, please visit the Help to Buy website.

YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU RE-MORTGAGE.