Equity Loans

How does it work?

The Help to Buy scheme means the government will lend you up to 20% (40% in London) of the full purchase price of a new-build home. This is called an equity loan.
You must buy your home from a homebuilder registered for Help to Buy: Equity Loan.
The amount you pay for a home depends on where in England you buy it and regional equity loan price caps are in place for this scheme ranging from £186,100 to £600,000.

Example: for a home with a £200,000 price tag:
equity loans

Example of how much your deposit, mortgage and equity loan may be if you buy a new home worth £200,000

  • 5% deposit: £10,000
  • 20% equity loan: £40,000
  • 75% mortgage (repayment mortgage from a lender): £150,000

For the first 5 years:

  • the equity loan is interest free, and
  • you pay a £1 monthly management fee by Direct Debit.

From year 6:

  • you pay the £1 monthly management fee, and
  • you pay monthly interest of 1.75% of the equity loan.

You will continue to pay interest until you pay off your loan in full.

The interest rate will rise in April each year based on the rate of inflation at the time (according to the Consumer Price Index), plus 2%. If the rate of inflation is 0% or less, the interest rate will rise by 2%.

Who is eligible?

Equity loans are available to first time buyers only. The home you want to buy must be newly built and regional price caps apply.
You won’t be able to sublet this home or enter a part exchange deal on your old home. You must not own any other property at the time you buy your new home with Help to Buy.

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