Help to buy equity loan
Help to Buy isn’t just for first time buyers. If you’re looking to move to a bigger, newer home in a great location, Help to Buy means you can move without needing a huge deposit, and with more manageable mortgage payments.
Moving with Help to Buy makes it less risky for lenders to offer a mortgage even if you’ve only got a 5% deposit. Which means you should get a much more favourable interest rate than you would normally with a small deposit. A mortgage under the Help to Buy scheme works like any other mortgage.
So what is a Help to Buy Equity Loan?
The Government-backed scheme has helped thousands of people buy a brand new home. The way it works is pretty simple.
- You’ll need a deposit to cover at least 5% of the purchase price.
- The Government lends you up to 20% of the sale price.
You arrange a repayment mortgage to borrow the rest.
The Help to Buy rules in England & Wales are slightly different to Scotland.
The biggest difference is the value of the Government equity loan. In England & Wales you can borrow up to 20%, in Scotland it’s 15%.
Help to Buy - England and Wales
- The property must be a new-build. All Keepmoat homes in England and Wales up to £600,000 qualify for Help to Buy
- You can’t own any other property anywhere in the world while you’re under the scheme
- Your mortgage must be a repayment one. Interest only, offset and guarantor mortgages are excluded from the scheme
- You can’t let out the property to somebody else – it must be the home you plan to live in. Help to Buy is not for investors
- Your mortgage can be taken out by an individual or individuals but not by a company
- You can’t use Help to Buy with any other Government scheme. But it can be used in conjunction with other Keepmoat offers
- The mortgage used to pay for the remaining 75% must be less than 4.5 times your income
Help to Buy - Scotland
The rules are the same as England and Wales, with the exception of:
- You receive an equity loan from the Scottish Government for up to 15% of the property value
- You secure up to an 80% mortgage from a bank or building society
- The maximum price of properties included in the scheme will reduce each year as follows:
1st March 2016 - 31st March 2017 the maximum property value is £230,000
1st April 2017 - 31st March 2018 the maximum property value is £200,000
1st April 2018 - 31st March 2019 the maximum property value is £175,000
What happens if I sell my Help to Buy home?
The Help to Buy equity loan must be paid in full when you sell your home. This is worked out as the percentage you borrow. And if you received a loan for 20% of the value when you bought the home, you’ll have to pay back 20% of the value when you sell. So if your home has increased in value, you’ll have to pay back a little more than you borrowed.
An independent valuer will decide what your home is worth and your home needs to be sold on the open market.
If you’ve already paid back your equity loan, there’s nothing else to pay back to the scheme.
*Help to Buy (England and Wales) purchasers are required to fund at least 80% of the purchase price by means of a conventional mortgage, savings and any deposit where required. Eligible applicants will be offered an equity loan of up to 20% of the market price, interest free for the first five years. At the start of year six a fee of 1.75% is payable on the equity loan, which rises annually by RPI inflation plus 1%. Please note Help to Buy charge £1 a month from outset as a management charge. Terms and conditions apply and full details will be provided on request. This offer is subject to status and not offered with any other promotion. Only available on Keepmoat properties in England up to £600,000. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
**Help to Buy (Scotland) purchasers are required to fund at least 85% of the purchase price by means of a conventional mortgage, savings and any deposit where required. Eligible applicants will be offered an equity loan of up to 15% of the market price. Terms and conditions apply and full details will be provided on request. Please note Help to Buy charge £1 a month from outset as a management charge. This offer is subject to status and not offered with any other promotion. Only available on Keepmoat properties in Scotland within the yearly maximum value. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.