Help to Buy
Assistance to home buyers purchasing a new build property in England
Help to Buy is a government initiative that provides assistance to home buyers purchasing a new build property in England in the form of an equity loan.
Essentially, first time home buyers who meet affordability and lending terms can borrow an equity loan of up to 20% of the sale price of a new build home, with a Help to Buy: Equity Loan, subject to eligibility, terms and conditions.
How much you can spend on your home will depend on which region it is in. In Lincolnshire there is a maximum of 20% of the total property value available in the form of an equity loan. This is capped at a total loan of £261,900.
You will not be charged interest on the equity loan for the first five years. Interest fees begin at 1.75% and rise each year in April by the Consumer Prices Index. This includes owner occupiers’ housing costs (CPIH) plus 2%.
Unfortunately, not all new homes are available to buy with Help to Buy assistance. The individual developer must first register their new build site with Help to Buy – and then they can advertise that funding is available. It’s worth looking out for the Help to Buy logo or asking for confirmation in each case.
Getting started is as easy as contacting your local Help to Buy: Equity Loan agent.
How does it Work?
Amount of loan
The maximum you can borrow with a Help to Buy: Equity Loan, subject to eligibility, terms and conditions, in England is £120,000 and up to £240,000 for London. There is no minimum amount.
Buyer deposit required
Buyers must provide a deposit of a minimum of 5% of the full purchase price of the home bought under this scheme.
Frequency, number and amount of repayments
After five years you will be required to pay an interest fee of 1.75% of the amount of your Help to Buy shared equity loan at the time you purchased your property, rising each year after that by the increase (if any) in the Retail Prices Index (RPI) plus 1%.
The loan itself is repayable after 25 years or on the sale of the property, if earlier.
If you breach the terms of the equity loan, you could be asked to repay in full.
You can also decide to pay off their equity loan in full or part at any time before any of these events.
Other payments and charges
With a Help to Buy: Equity Loan, subject to eligibility, terms and conditions, you must pay a monthly management fee of £1 per month from the start of the loan until it is repaid.
Total amount repayable
The total amount repayable by you will be the proportion of the market value of your home that was funded by this loan, plus interest and charges. The amount you will have to repay under the loan agreement will depend on the market value of your home when you repay the Help to Buy equity loan and the rate of inflation in the meantime.
For more details on how the Help to Buy scheme could help you, please contact us today and we will gladly assist you.
A full guide to the Help to Buy scheme can also be found on the government website. Here’s a link to make things easier for you:
Have a look at the latest developments in Lincolnshire.