What Is Help To Buy?

21st June 2021

What are Help to Buy Equity Loans?

Launched by the government in 2013, Help to Buy Equity Loans are aimed at helping those who are struggling to get on the property ladder.

There are different Equity Loan schemes for England, Greater LondonWales and Scotland, and they all vary slightly.

The government’s Help to Buy: Equity Loan scheme is designed to get people into a brand-new home with just a 5% deposit. In essence, the government will lend you up to 20% of the cost of your new-build home (increases to up to 40% in London), leaving you to pay a 5% deposit and take out a 75% mortgage to cover the rest of the funding. Most importantly, you won’t be charged any fees on the 20% loan for the first five years.

To be eligible for a Help to Buy loan, your new home must be newly built and under £600,000. You can’t own any other property and you won’t be able to sublet your new home or take a part-exchange deal on your old property.

What’s different about the new Help to Buy Equity Loan scheme?

• Only first time buyers will be able to use the new Help to Buy Equity Loan scheme.
• New regional price caps will be introduced. As a result, the maximum value of homes that can be bought with the scheme’s help will be dramatically cut in most areas. The caps have been set at 1.5 times the average first time buyer price in each region (as of Autumn 2018).

What are the regional price caps?

Region Price Cap
North East £186,100
North West £224,400
Yorkshire and The Humber £228,100
East Midlands £261,900
West Midlands £255,600
East of England £407,400
London £600,000
South East £437,600
South West £349,000

What are my other options?

While Help to Buy has been popular with first time buyers, it’s not the only route available if you have a small deposit.

  • 95% mortgages: The average rates on mortgages that require just a 5% deposit have reduced significantly in recent years. This has made them considerably cheaper. And unlike with the Help to Buy Equity Loan scheme, you won’t be restricted to new build properties. However, as James explains above, you may struggle to get a high loan to value mortgage on a new build property.
  • Shared Ownership: Also known as ‘part buy, part rent’, this scheme allows you to buy a share of a property and pay rent on the rest. And as you’ll only need a mortgage for the share you’re purchasing, you’ll need a much smaller deposit than if you were buying the home outright. Find out more about Shared Ownership here.
  • Guarantor mortgages: This is when a parent or close family member uses their own property or savings as security against your loan. This means lenders may accept a smaller deposit than usual and sometimes they won’t require any deposit at all. Find out more about guarantor mortgages here.

 

If you’re interested in buying a new home with Help to Buy, contact our team of expert mortgage advisers and we’ll explain in more detail how the scheme can apply to you and get you started on your moving journey. Call us on 08454 500200 or click here to make an enquiry.

With mortgage brokers in Winchester, Southampton, Farnham, Bishops Waltham, Alton, Chandlers Ford, Alresford, Romsey and Park Gate, you are never too far from mortgage advice.

Your home may be repossessed if you do not keep up repayments on your mortgage. There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.

< Back to News and Blog

We started our enquiry not really knowing where we wanted to live or if indeed we were ready to buy our first house. I was passed through to Chawley, the mortgage consultant, and he was fantastic throughout. He took the time to explain things surely out of his remit and became someone I trusted quickly. Once we found our now home Chawley helped with the offer process and even some elements of the home buyers report. Cara helped at this point with insurance and updates, and was also great to work with. Throughout the entire process we felt like Chawley was the only person we worked with who took the time to really make sure we understood the lingo and the market. Thank you!

Becci

August 2020

Get the Right Mortgage Advice