Help to Buy Equity Loan
The Help to Buy Equity Loan scheme is open to both first time buyers and existing homeowners. There is no income cap for applicants and you can buy a new-build property with a value of up to £600,000. The scheme helps you to buy your home with an equity loan of up to 20% of the full price of the property. You won't have to pay any interest charges on this loan for the first five years and you own 100% of your own home from the start. Click here for more information.
How does the Equity Loan work?
You buy 100% of a new home from a registered developer, but it's more affordable because you only have to raise 80% of the purchase price yourself initially.
The remaining 20% is covered by an 'equity loan' from the government. This loan is 'interest free' for the first five years. From year six, you'll start paying a monthly fee.
You'll need to be able to find at least 80% of the property price through a conventional mortgage with a lender. But lenders usually require you to have a deposit of at least 5%, your mortgage will typically be for 75% of the purchase price.
How do I find a Help to Buy Equity Loan property?
Help to Buy Equity Loan properties are available from participating registered developers. Properties up to a value of £600,000 can be included in the scheme. You can find details of registered developers offering Help to Buy properties across the midlands here or through our online property search.
How do I apply for Help to Buy Equity Loan?
When you have found a suitable property (which is a newly built property from a participating registered developer) you will need to follow these steps:
- Fill in a Property Information Form Oct14.[pdf] 317KB, Property Information Form Oct14.[doc] 429KB (or obtain one from a registered developer).
- Complete the relevant reservation paperwork with the registered developer.
- Submit both forms to Help to Buy Midlands by emailing them to us at email@example.com (or post to us at Help to Buy Midlands, Garden Court, Harry Weston Road, Binley, COVENTRY CV3 2SU).
- We will issue a document called an Authority to Proceed. NOTE – please do not apply for a mortgage prior to receiving this document.
- Your Authority to Proceed will then outline the next steps – please ensure you have read the Help to Buy “Buyer’s Guide” Help to Buy Buyers Guide Aug14.pdf [pdf] 247KB
At present part exchange is not available on the Help to Buy Equity Loan scheme. Your Help to Buy Equity Loan property must be your only property by the time of purchaser legal completion.
Repaying the Equity Loan
The Help to Buy Equity Loan will be interest free for the first five years; from year six a fee applies which increases annually by RPI +1% from year seven. The total amount you'll pay back on the equity loan relates to the property's market value at the time of repayment.
So if the value of your home goes up, the amount you pay back also goes up. If the value of your home goes down, the amount you pay back also goes down, so you are protected if the market falls after you buy.
You must pay back your Equity Loan within 25 years or if you move, whichever is sooner.
More information is available in the government's Help to Buy Buyer's Guide.
Equity Loan Customer Stories
Hear from some of our customers who have got on the property ladder with Help to Buy Equity Loan:
I am a developer wishing to register for Help to Buy Equity Loan funding
If you are not already signed up for funding, you can find the registration document and submission forms at Homes and Communities website.
Developers can contact the HCA regarding Help to Buy at firstname.lastname@example.org. Please note this e-mail address is only for developers with queries relating to Help to Buy Equity Loan, not for general enquiries.
For guidance on developer participation please read this report.