Help to Buy: Equity Loan

The Help to Buy Equity Loan scheme is open to both first time buyers and existing homeowners.

This scheme may be for you if:

  • You’re buying your first home and are finding it difficult to save for that ‘big’ deposit.
  • You’re looking to move to your next property but need help to get you onto the next rung of the ladder.

The scheme helps you to buy a newly-built home with an equity loan of up to 20% of the full price of the property. You won’t have to pay any interest charges on this loan for the first five years and you own 100% of your own home from the start.

You buy 100% of a brand new home from a developer who is registered for the scheme.  You fund 80% of the purchase through a combination of a mortgage and your deposit; the remaining 20% is covered by an ‘equity loan’ from the government.

When you purchase your new home you will pay a monthly management fee of £1 which continues until the equity loan is repaid.

The equity loan is interest free for the first five years.

From year six, you’ll start paying a monthly administration fee on the loan.  These are not repayments of the loan itself.

Your mortgage and deposit

You must have a mortgage to be able to buy using the Help to Buy Equity Loan scheme.

You will need a minimum 5% deposit, along with a 75% mortgage, but you can put in a higher deposit to reduce your mortgage if you wish.  The minimum mortgage level acceptable for this scheme is 25% of the full purchase price.

Before you start the process, we would recommend that you take some independent financial advice to find out how much you can borrow for a mortgage.

Help to Buy: ISA

If you are saving to buy your first home, save money into a Help to Buy: ISA and the Government will boost your savings by 25%. So, for every £200 you save, receive a government bonus of £50. The maximum government bonus you can receive is £3,000.

Open: the Help to Buy: ISA is available from a range of banks, building societies and credit unions.

The accounts are available to each first time buyer, not each household. This means that if you are planning to buy with your partner, for example, you could receive a government bonus of up to £6,000 towards your first home.

Save: save up to £200 a month into your Help to Buy: ISA. To kickstart your account, in your first month, you can deposit a lump sum of up to £1,200.

The minimum government bonus is £400, meaning that you need to have saved at least £1,600 into your Help to Buy: ISA before you can claim your bonus. The maximum government bonus you can receive is £3,000 – to receive that, you need to have saved £12,000.

Receive bonus: when you are close to buying your first home, you will need to instruct your solicitor or conveyancer to apply for your government bonus. Once they receive the government bonus, it will be added to the money you are putting towards your first home. The bonus must be included with the funds consolidated at the completion of the property transaction. The bonus cannot be used for the deposit due at the exchange of contracts, to pay for solicitor’s, estate agent’s fees or any other indirect costs associated with buying a home.

Assisted Move

We know the prospect of selling your home isn’t appealing. Especially when all you want to do is think about moving into your new Owl Home!

We can help!

We arrange for 2 independent valuations with local agents and agree a selling price with you. We will manage the sale of your property from advertising through to completion and keep you informed every step of the way. Its as simple as that