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Help to Buy

If you cannot afford to buy your own home then you may be able to get assistance through the government’s Help to Buy scheme.

Equity loans

Equity loans are available to first time buyers and other home movers looking to move into a new-build home in England, with a house value of up to £600,000.

With an equity loan:

  • You provide a deposit of at least 5% of the property’s value..
  • The government loans you up to 20% of the property’s value by way of an equity loan.
  • A mortgage lender provides the borrowing for the remaining 75% balance to make up the total purchase price/valuation providing you meet their criteria..
  • Sub letting the property is not allowed and the property to be purchased using the Help to Buy scheme must be your only property that you reside in.

What do I pay if I have a mortgage and an equity loan?

  • You pay your normal mortgage repayments.
  • The government equity loan is interest free for the first five years, from the sixth year onwards you will pay an administration fee of 1.75% of the total loan value.
  • The administration fee will increase year-on-year by any increase in the Retail Prices Index plus 1%.

The administration fees you pay after five years do not reduce the total balance of the equity loan.  This will need to be repaid at the end of the mortgage term or when you sell the property – whichever is the earlier.

David Allen Financial Services offers whole of market, impartial mortgage advice, searching the market to find you the best deal. Contact us to arrange your FREE initial appointment.