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The New Help to Buy: Equity Loan Scheme: What You Need to Know

First-time buyers are able to apply for an equity loan with the new Help to Buy: Equity Loan (2021-2023) scheme from 16 December 2020. The new scheme replaces the current Help to Buy: Equity Loan Read more...

First-time buyers are able to apply for an equity loan with the new Help to Buy: Equity Loan (2021-2023) scheme from 16 December 2020. The new scheme replaces the current Help to Buy: Equity Loan scheme, which ends on 31 March 2020.

How does the Help to Buy: Equity Loan Scheme work?

Eligible buyers applying to the new Help to Buy: Equity Loan scheme can receive a government loan of up to 20% (or 40% if the property is in London) to enable them to purchase a new-build property.

Applicants will have to pay a minimum deposit of 5% and take out a mortgage of at least 25% to meet the remainder of the purchase cost.

For the first 5 years, buyers won’t have to pay any interest on their equity loan; after this a monthly interest fee of 1.75% is payable.

There are also caps to the cost of properties bought with assistance from the Help To Buy: Equity Loan, which vary according to location; this is based on 1.5 times the value of the average price of a home bought in the corresponding area.

It is important to note that the availability of this scheme is limited to 2 years; it will end on 31 March 2023. Therefore, it is best to act swiftly if you think that this is an option that could work for you. You can begin looking for available properties now, and reserve your chosen home from 16 December, however the earliest date that you’ll be able to complete on your purchase is 1 April 2021.

Who can apply for a Help to Buy: Equity Loan?

First-time buyers and existing or previous homeowners in England can apply for an equity loan, however you must not own any other property or enter a part exchange deal on your current home.

Only new-build properties from certified Help to Buy builders can be purchased with a Help to Buy equity loan.

How We Can Help

The Help To Buy: Equity Loan scheme could be a lifeline to many first-time buyers in England, however it may not be the best option for everyone. Obtaining independent legal and financial advice is recommended by the UK Government.

If you would like to seek legal advice regarding the Help To Buy: Equity Loan scheme, our extensive and experienced team of Real Estate lawyers are happy to help. Email us at enquiries@lawstep.co.uk for more information.

If you would like to discuss any of the topics raised in the above article, please call us on +44 (0)20 7936 8888, email on enquiries@lawstep.co.uk or contact a member of the team below.

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