Many of you may be aware of the previous Help to Buy scheme, well the good news is another is on it’s way, aimed specifically for first-time buyers. The scheme allows successful applicants to apply now for an equity loan and use the scheme to buy their new-build home on or after 1 April 2021.
The Help to Buy scheme is part of a larger policy helping people into homes through equity loans for first-time buyers, shared ownership and a £12 Billion investment in ‘affordable housing’ is aimed at helping the first-time buyer into the housing market whilst supporting the housebuilding sector during this particularly difficult time.
The way the scheme will work is relatively simple. First-time buyers that wish to buy a new-build home will be able to apply for an Equity Loan from the government for up to 20% of the home’s value (40% in London). The home-buyer then pays a deposit of 5% or more, with the remainder being covered by a mortgage of 25% or more of the value of the new home (55% in London).
The home that you buy must:
- be a new build
- have a purchase price of up to £600,000 in England (or £300,000 in Wales)
- be the only property you own
- not be sub-let or rented out after you buy it
- be one that you can show you cannot afford ordinarily
In addition to mortgage repayments, you’ll have to pay equity loan fees, but not for the first 5 years. In the sixth year, you’ll be charged a fee of 1.75% of the Equity Loan’s value. The fee then increases every year, according to the Retail Prices Index plus 1%.
Fees do not count towards paying back the loan, which must be paid back within 25 years or when you sell the property. This payment will be pro-rata to the loan amount.
For example, if your home is bought for £250,000 with a 75% mortgage, a 5% deposit and a 20% Equity Loan and it then goes up in value by 30% over 10 years, you would have equity in the property of £75,000 in total. The repayment of the Equity Loan capital as and when you sell would cost you £65,000 (£50,000 initial 20% loan plus 20% of the Equity created).
Contact us or book a free call or video appointment to speak to a specialist Help to Buy mortgage adviser.
Recent posts
We look at how to get the best Buy to Let mortgage rate, what's in store going forward, and options as a landlord with increasing costs.
UK mortgage rates following Trump’s Tariffs
9 days ago
Throughout this past week, lenders have continued to reduce their mortgage rates giving borrowers in the UK some welcome news following the change in global tariffs under US President, Donald Trump.
Effective ways to relieve stress
9 days ago
Did you know that buying a house, or relocating is in the top 10 most stressful life events?
Stress of course is an unavoidable part of life and there are many reasons why people experience stress, not just buying a house!
There are lots of effective ways to manage and reduce stress, check out our tips to help you.
The most inexpensive areas for first time buyers
22 days ago
With the stamp duty relief ending in England and Northern Ireland, we have listed the top 10 cheapest areas for first-time buyers as published by Rightmove.
Tips to help you get onto the property ladder
22 days ago
Are you looking to purchase your first home but unsure where to begin? Here are some tips to get you started.
Choosing which fixed rate to go for has been a dilemma for many of our clients so far this year. There really isn’t a right or wrong answer, but below we will look into the pros and cons of a two-year and five-year to help you make the right decision for you.
Best UK Mortgage Rates this Week
18 Mar 2025
Here are the lowest fixed mortgage rates of the week, available to first-time buyers, home movers, buy-to-let, and those remortgaging.
Call us for more information: 01628 507477 or email: team@mortgagerequired.com.
Stamp Duty Rush as Deadline Looms
17 Mar 2025
According to Rightmove, a whopping 500,000 UK homebuyers are rushing to finalise their home purchase before the new Stamp Duty rules change in April.
More information
Trusted by
