Equity loans are open to both first-time buyers and home movers on new-build homes in England with a purchase price up to £600,000.
You won’t be able to sub-let your home if you use this scheme. It must also be your only property.
How it works
With an equity loan:
- you’ll need to contribute at least 5% of the property price as a deposit
- the government will give you a loan for up to 20% of the price
- you’ll need a mortgage of up to 75% to cover the rest
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Equity loan fees
You won’t be charged loan fees for the first 5 years of owning your home.
In the sixth year, you’ll be charged a fee of 1.75% of the loan’s value. After this, the fee will increase every year. The increase is worked out by using the Retail Prices Index plus 1%.
Your Help to Buy agent will contact you before the fees start, to set up monthly payments with your bank. You’ll also be sent a statement about your loan each year.
Fees don’t count towards paying back the equity loan.
Applying for an equity loan
Contact the Help to Buy agent in the area where you want to live if you’d like to buy a home with an equity loan.
You must buy your home from a registered Help to Buy builder. Your Help to Buy agent should have a list of registered builders for you to choose from.
Selling your home and paying back the loan
The home will be in your name, which means you can sell it at any time. You’ll have to pay back the equity loan when you sell your home or at the end of your mortgage period - whichever comes first.
You can also pay back some of your equity loan without selling your home. You can pay back either 10% or 20% or the total amount, so long as the loan is worth at least 10% of the value of your home.
Talk to your lender and Help to Buy agent if you want to pay the loan back in full.