Are you looking for how to buy equity loan then this article will explain all you need to know and steps on how to buy equity loan.
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What’s the Help to buy: Equity loan scheme?
This government program is for first-time buyers. This loan is called an equity loan and can be used to finance the purchase of a new home.
Help to Buy is a program that helps first-time buyers get on the property ladder. You can borrow as much as 20% (or 40% if you are in London) from equity loans if your property is eligible.
The equity loan term only charges interest on the amount borrowed. The loan is not due to be paid off. You can pay off a portion or all of the loan at any time. You will have to repay all equity loans if you sell your house.
Only registered homebuilders can apply for equity loans.
Help to Buy (2021-2023), ends 31 March 2023. Our FAQs provide more information about the closing date for new applications.
| Maximum price of a house – April 2021 to February 2023 | |
|---|---|
| Region | Maximum property value |
| North East | PS186,100 |
| North West | PS224,400 |
| Yorkshire and the Humber | PS228,100 |
| East Midlands | PS261,900 |
| West Midlands | PS255,600 |
| East of England | PS407,400 |
| London | PS600,000 |
| South East | PS437,600 |
| South West | PS349,000 |
Maximum property price is the total purchase price. This price cannot be changed or negotiated.
Your homebuilder can confirm that the home you are interested in buying is within your budget.
You must:
- At exchange of contracts, pay a deposit equal to 5% of the new home’s purchase price.
- A repayment mortgage should be arranged for at least 25% of the new home’s purchase price
If one of these events occurs, you must repay your equity loan fully.
- The term of the equity loan ends
- Repayment of your mortgage
- You can sell your house
- If you do not comply with the terms of the equity loan contract, we ask that you repay the loan in its entirety.
The equity loan cannot be paid in monthly installments. You can make partial or full payments to your equity loan at any time.
You must make a minimum of 10% extra on top of the monthly interest payments.
The equity loan does not come with interest. The first five years are free of interest. However, you will have to start paying it after year 6.
A repayment mortgage can be secured against an equity loan, but it cannot be secured against your property. Financial Conduct Authority (FCA) does not regulate the Help to Buy Equity Loan program.
You might pay more back than you borrowed
The market value of the home you are buying when you purchase it determines how much you can borrow.
The amount you pay to repay your equity loan is calculated as a percentage the market value.
The amount you owe will increase if your home’s market value increases. The amount you must pay will also fall if your home’s value falls.
If you fail to make your payments on your equity loan, repayment mortgage or repayment mortgage, your home could be taken away. Before making financial decisions, it is worth seeking independent financial advice.Find out more about the home-buying process at our website. Homebuyer’s Guide to Equity Loan (2021-2023).
Who is eligible to apply for a Help To Buy: Equity Loan?
To get a Help-to-Buy: Equity Loan, you must meet the eligibility requirements.