The Government’s Help to Buy Equity Loan scheme is designed for first time buyers who are looking to buy a new home or existing single-property homeowners who need a little help to make their next move. We think it’s worth looking into if you need a little help to get on the housing ladder or to buy the home of your dreams.
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Here, you’ll find a brief overview of how it works, but for the full financial details, examples of the interest you will pay and relevant timescales, simply visit their website detailed below. In England, the Help to Buy Equity Loan scheme lends you up to a maximum of 20% of the full purchase price of your newly built home.
So if you apply for a 20% loan, you just need to pay the minimum 5% deposit and apply for a 75% mortgage. The loan is repayable after 25 years or on the sale on the property, if earlier. Whether the value of your home rises or falls, you will need to repay the same percentage as your original loan, (i.e. if the equity loan was 20%, you will pay 20% of any future sale proceeds.)
Buyers using this scheme must provide security in the form of a second legal charge over the home purchased with the Help to Buy equity loan.
Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.