Affordable home ownership schemes

2. Help to Buy equity loan

You can get a low-interest loan towards your deposit. This is called an equity loan.

Eligibility

The home 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 one you own
  • not be sub-let or rented out after you buy it
  • be one that you can show you can’t afford (if you’re applying in Wales)

How it works

With an equity loan:

  • you need a 5% deposit
  • the government will lend you up to 20% (up to 40% in London)
  • you need a mortgage of up to 75% for the rest (up to 55% in London)

You must buy your home from a registered Help to Buy builder - your agent should have a list.

Example

For a £200,000 property Amount Percentage
Cash deposit £10,000 5%
Equity loan £40,000 (£80,000 in London) 20% (40% in London)
Mortgage £150,000 (£110,000 in London) 75% (55% in London)

Equity loan fees

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 loan’s value. The fee then increases every year, according to the Retail Prices Index plus 1%.

Your Help to Buy agent will contact you to set up these monthly fee payments. You’ll also get a statement about your loan each year.

Fees don’t count towards paying back the loan.

Paying back the loan

You must pay back the loan after 25 years or when you sell your home - whichever comes first. The amount you pay back depends on how much your home is worth (the market value).

Example

Market value of your home Equity loan Amount
Bought for £200,000 20% Borrowed £40,000
Sold for £250,000 20% Pay back £50,000

You can pay back part or all of your loan at any time. The smallest repayment you can make is 10% of the market value of your home.

Example

Market value of your home Percentage Amount
Bought for £200,000 Borrowed 20% £40,000
Value at time of payment £220,000 Paying back 10% £22,000

How to apply

Apply through the: