Help To Buy Scheme

The Government Help to Buy scheme was launched in April 2013. The scheme allows eligible applicants to apply for an equity loan of up to 20% of the New House price, requiring the purchaser to fund just 5% of the purchase price.

You then need to raise the remaining 75% by way of a mortgage. You must borrow at least 25% of the purchase price to qualify for the scheme. Not all lenders support the scheme but there is a varied choice. The 20% equity loan is free for the first 5 years and no payment is made by you. From year 6 onwards a fee of around £60 per £40,000 of equity loan taken becomes payable monthly. This fee does not reduce the 20% equity loan and is in effect a service charge. This fee will increase annually but is designed to remain affordable. The 20% equity loan becomes repayable after 25 years, or upon earlier sale or you can repay at any time.

The amount repayable reflects the market value at the time of disposal so if property prices increase the amount owed will increase, equally if prices fall the amount payable will be less than originally taken from the scheme.

The Government has announced a new Help to Buy scheme to run from April 2021. It is restricted to first-time buyers and includes regional property price caps to ensure the scheme reaches people who need it most. There are no changes to the current Help to Buy equity loan scheme which runs to March 2021.

The new scheme will run from April 2021 to March 2023. As with the current scheme, under the new scheme, the government will lend buyers up to 20% of the cost of a newly built home, and up to 40% in London.

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For more information on the current scheme please read the Help to Buy Buyers’ Guide

An application to the Help To Buy scheme will be completed by us and submitted for approval. The agency will issue an “Authority To Proceed” once accepted and then after some legal formalities will issue an “Authority to Exchange Contracts.”

The Help to Buy scheme is only available to clients for the purchase of their main residence and is not to be used for investment purchase, nor second homes so if you already own a property which you intend to retain, the scheme will be unable to support your application.

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