HELP TO BUY: Equity Loan
What is it?
Help to Buy: Equity Loan government scheme is designed to aid first time buyers and home-movers with purchasing a property. The scheme is for new builds only, valued under £600,00. It is designed to help when purchasers are struggling to find a full mortgage deposit. How it works is as follows; the Government lends the buyer up to 20% of the cost of the property, and this allows applicants to pay only a 5% deposit. That leaves the buyer having to find a mortgage of up to 75% to make up for the remainder of the purchase price.
If you decide that this method would be the perfect fit for you in order to buy your dream home, speak with one of our advisers today. Read on to find out more about the scheme.
For the first five years, you will pay no interest on the 20% loan, which will help with the burden of finding a deposit. In the sixth year of the mortgage, you will pay 1.75% P.A (of the equity loan) as interest. It will then increase each year in line with the Retail Price Index (RPI).
The equity loan must be repaid after 25 years. If you sell your home this will be earlier. You must also repay any percentage of equity increase back to the government.
Can you qualify?
The scheme is open to all buyers who are interested in purchasing a new build property however, the property you purchase through the scheme must be your only residence. It is NOT available to buy-to-let investors or those renting and wanting to buy a second home.
Buyers outside of London must be able to fund 80% of their home through a mortgage and a deposit. London buyers must be able to fund 60% through a mortgage and a deposit.
As mentioned above, the buyer MUST provide a minimum of 5% deposit, this 5% can be from a family gift, a builder’s gift or incentive, Force’s help to buy or from the applicants own resources. The property must have a value below £600,000.
Buyers who require a main mortgage of more than 4.5 times their household income cannot use the scheme.
The Help to Buy scheme requires you to provide a deposit, however it will be smaller. The government lend you an Equity Loan of up to 20% of the cost of the property, leaving 5% needed for a deposit and the remaining 75% to be made up via a mortgage.
If you think this scheme is the right fit for you, call View Finance on 0333 320 8658 or e-mail [email protected] for advice from one of our experienced brokers.