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Schemes for first-time buyers
A loan to help you get on the ladder
See how it could work for you
What is it?
Help to Buy Equity Loans allow you to take out a loan which you then add to your deposit for the house you want to buy.
You take out a shared equity mortgage on the remaining part of the property's price.
Benefits
- Although the name ‘equity loan’ suggests that you are sharing your property purchase with someone else, you actually own 100% of the property. The 'loan equity' part just means that you're taking out a loan which counts towards your deposit.
- Having this bigger deposit can help you buy a property earlier than you could otherwise. You might also be able to find cheaper mortgage deals, as your deposit would be boosted.
Glossary of terms
Shared equity mortgage
A shared equity mortgage is when a mortgage lender gives you a loan alongside your main mortgage in return for a share of profits when you sell your house or repay the loan.
How it works
- It allows first-time buyers and home movers to put down a 5% deposit on a new-build home worth up to £600,000, with up to 20% of the cost of the property covered by a shared equity loan
- You can repay the loan at any time during the term of the mortgage, or when you sell your property
- The value of this loan is linked to the value of the property you’ve bought. So, if this rises over time, the loan amount you have to pay back will also go up
What I need to contribute
- You need to contribute at least 5% of the property price as a deposit
- The government will give you a loan for up to 20% of the price
- You'd need a mortgage of up to 75% to cover the rest Example below for a property worth £200,000
Example below for a property worth £200,000
What are the fees?
- You won’t be charged loan fees for the first five years of owning your home
- There’s no interest to pay on the loan for the first five years, but after that, you have to pay a fee of 1.75% of the loan’s value, and this increases every year by the Retail Prices Index (RPI) measure of inflation, plus 1%
- Fees don’t count towards paying back the equity loan
What happens if I sell my home?
- You must pay back the loan after 25 years or when you sell your home - whichever is earliest, and you can pay back part or all of your loan at any time
- How much you pay back will depend on the market value at that time, but the minimum percentage you can pay back is 10% of the market value of your home