Help To Buy Scheme Launches for First Time Buyers - What you need to know

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The government has just opened a NEW Help To Buy Scheme for First Time Buyers!  Yes, you did read that correctly! 

The New “Help To Buy: Equity Loan (2021-2023)” scheme opens for applications December 16th 2020.  

The much anticipated scheme has arrived at a great moment. Now more than ever, keen homeowners like you and I could really use a bit of good news from the property industry - and here it is. (Just in time for Christmas too!)

Those first time buyers that are eligible will be able to reserve their home from mid-December 2020 and get the keys to move in in April 2021! 

Let's start exploring what the New Help to Buy: Equity Loan means for you as a first or multiple time home buyer. Beginning with what's breaking from Help To Buy’s release…

* If you had a home reserved from 30 June 2020 and the process was directly affected by Covid-19, the scheme is offering an extension period. See below.

  • The NEW Help To Buy: Equity Loan Scheme is open to first time buyers” and is available for two-years starting April 1 2021 to 31 March 2023. 

  • First Time Buyers can apply for Help to Buy: Equity Loan Scheme (2021-2023) from Wednesday 16 December 2020

  1. Find and reserve your new build home on a development from a registered home builder (See 'Tips' at end.)
  2. Get professional advice by contacting the Help to Buy Agents

  •  If you have had a home reserved from “30th June 2020” and experienced severe delays with your purchase in direct relation to Covid-19, homebuyers are told, “you will have more time to buy your home” Visit Help to Buy: Equity Loan customers during Covid-19 for Government advice. 

How does the New Equity Loan Scheme work?

As part of the Help to Buy: Equity Scheme, the Government lends homebuyers an amount of up to 20% (40% in London) on the cost of their newly built home.

In terms of deposits, the first time home buyer pays a deposit of as little as 5%, but you put more down as a deposit and still be eligible for the scheme. 

What’s the interest rate? Good-news. Help to Buy: Equity Loan is interest-free for the first five years. 

For Example:

You choose a home for £200k outside of London. 

The buyer pays £10k as a (5%) deposit and the Government loans £20k (20% equity loan). 

The remaining £150k (75%) is the mortgage from a commercial lender repayable from Year 6.

In London, you choose a property for £400k.

The buyer pays a 5% deposit (£20k) and the Government loans 40% (£160k).

The buyer receives a 55% mortgage (£220k) from a commercial lender which is repayable from Year 6. 

Who’s Eligible? 

First time buyers and those looking to move houses are eligible for Help to Buy: Equity Scheme. The home must be a new-build from a registered developer, up to the price of £600,000. So far, the scheme is set to extend to England only and Regional price caps apply.

How do I pay back the equity loan?

The new Help to Buy Equity Loan scheme charges a monthly management fee of £1 to a direct debit card, other than this, it is interest free for the first five years.

From Year 6, you will start to pay a monthly interest fee of 1.75% of the equity loan and continue to pay the £1 management fee. 

Each year to follow, your interest fee will rise in April by RPI (Retail Price Index) plus 1% until your loan is repaid. 

Help to Buy say that ‘you only need to repay the equity loan in full when it comes to the following’...

  • You pay off your mortgage
  • You sell your home
  • You come to the end of your equity loan term. 

And, you can choose to ‘pay off’ your equity loan at any time in “full or 10% chunks” before the end of the loan period. 

What happens if the value of my home changes? 

Help to Buy answer this as the following;

“If the value of your home rises, so does the amount you owe on your equity loan. It also works both ways, if the value of your home falls, the amount you own on your loan falls too.”


£ borrowed in the beginning  = % value of new home.
Any £ to be paid back = the same % value of the home at the current time. 

We encourage First Time Buyers interested in the Help to Buy: Equity Scheme to read and downloadThe Home Buyer’s Guide to Help to Buy Equity Scheme” from Homes directly.

Here’s what some local authorities had to say on the release of the new scheme:

Director of Help to Buy at Homes England, Will German; 

“We’re pleased we can help home buyers with smaller deposits to own a home, at a time where there are fewer options open to them…

… Housing, like most sectors, has experienced a slowdown during the Covid-crisis but Help to Buy continues to give home builders the confidence to keep on building at a more crucial time than ever.”

Housing Secretary MP, Robert Jenrick also said in relation to the scheme;

“Alongside First Homes, Shared Ownership and our £12b investment in affordable housing, our new Help to Buy scheme will help thousands more families take their first step into a home of their own.”

Tip: Ensure that your soon-to-be property is built by a registered developer.

Home Builders MUST display their HBF (Home Builder Federation) star ratings when advertising homes, so look out for these. A registered developer will give you a home warranty before the purchase is completed. Help to Buy Home Builders are also asked to agree to the following; Consumer Code for Builders, the New Homes Ombudsman, the Building Safety Charter and fulfill all planning permissions and building regulations. Make sure it’s the real deal and ask your broker for advice.

The New Help to Buy: Equity Scheme is set to open 16 December 2020. Visit How To Apply with Help to Buy here.

Happy House-Hunting! 

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