What is the Help to Buy equity loan?
The Help to Buy equity loan is a government scheme that boosts the size of your deposit. Under the scheme, the Government lends you up to 20% of the cost of your new home (up to 40% in London) – allowing you to purchase a new-build home with as little as 5% deposit.
The scheme is available on new build properties in England that are valued up to £600,000, and is open to any UK resident.
How does the Help To Buy equity loan work?
If you can offer a deposit of 5% of your home’s total value then the government will boost your deposit with a loan of up to 20% of the total cost of the property (40% if you’re buying in London). This effectively means you have a larger deposit to buy a home. Your mortgage will make up the other 75% (or 55% in London).
With the larger deposit available to you under this Help To Buy scheme, you should be able to get a lower interest on your mortgage. This gives you more flexibility in your repayment and makes it easier to obtain a mortgage agreement. Help To Buy also means that you won’t have to take out an expensive 95% mortgage. You won’t need to pay interest on the government’s equity loan for the first five years.
The Help To Buy equity loan is only suitable if you’re sure that you’ll always be able to afford the mortgage repayments for your property. If you don’t repay your loan within the first 5 years, you will incur a monthly interest charge. If you want to repay it after the initial five year period you will need to repay it in chunks of at least 10%. The amount you repay will also fluctuate with the price of your home, meaning that it isn’t a fixed sum.
More detailed information about the scheme is also available on the government’s Help to Buy website.
Buying in London?
If you’re buying a property within Greater London, the Government will lend up to 40% of the purchase price. With a minimum 5% deposit, your mortgage will make up the remaining 55%.
View the full terms and conditions
Other schemes that are available
In addition to the Help To Buy equity loan, L&Q also offer another scheme called shared ownership. Find out more about shared ownership.
Unsure which scheme is right for you? We’ve taken a detailed look at the pros and cons of each scheme.
Check our property listings to see if the Help To Buy equity loan is available at the L&Q development you’re interested in.