Help to Buy Equity Loan scheme for first time buyers and existing homeowners

January 02, 2017 By BHW New Build

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 as the equity loan has to be registered as a second charge against the mortgage.  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 under this scheme is 25% of the full purchase price.  

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