Help to buy Equity Loan

What is Help to Buy and how does it work?

The popular Government-funded Help to Buy Equity Loan is available until 2021, so you can find your new home with just a 5% deposit. With competitive mortgage rates available, now really is a great time to buy.

The Government will lend you up to 20% (40% in London) of the cost of your newly built home, so you’ll only need to provide a 5% deposit and arrange a 75% mortgage to make up the rest of the purchase price. This will often mean that a mortgage lender will offer you a better interest rate as there is less risk on their behalf.

You won’t be charged loan fees on the 20% loan for the first five years of owning your home.

If the home in the example above sold for £175,000, you’d get £168,000 (80%, from your mortgage and the cash deposit) and you’d pay back £42,000 on the loan (20%). You’d need to pay off your mortgage with your share of the money.

Who is Eligible

The scheme is available to first-time buyers and existing homeowners. The home you buy must be your only residence. Help to Buy is not available to assist buy-to-let investors or those who will own any other property after they complete.

The terms of the scheme vary between England, Scotland, Wales and London, so take a look at the Help to Buy Scheme in your area for more details.

For more information (including advice on fees and paying back your loan), speak to a mortgage specialist.

Getting that 5% deposit

Your deposit does not have to come from savings. You can use any of the below sources;

  • Gifted deposit – This is when an immediate relative provides all or some of your deposit. Not all lenders will accept this so it’s important to speak to a mortgage specialist first.
  • Help to Buy ISA – A savings account which the government contributes towards when you purchase a property. You can easily open an account with most banks
  • Forces Help to Buy – The Forces Help to Buy scheme enables servicemen and servicewomen to borrow up to 50% of their salary, interest-free, to buy their first home or move to another property on assignment or as their families needs change.
  • Save Save Save – Work out a monthly budget and so long as your outgoings are not too high you should be able to save up a deposit in a matter of months not years.

The Application Process

Step 1: Speak with Mortgage Squared to confirm your eligibility for the help to buy scheme and to gain a Mortgage agreement in principle, we will help you find the most suitable mortgage product and guide you through the Help to Buy Equity Loan Calculator to assess your affordability before submitting your HTB application.

Step 2: Locate a participating house builder and find a property.  Visit Rightmove, ZooplaWhatHouseHTB Homes and Homes for Londoners

Step 3: Click here to download the Property Information Form which will also be your application form.

Step 4: Submit the Property Information Form and Developer Reservation Form to the relevant Help to Buy Agent via email or post:

Step 5: Mortgage Squared will submit the mortgage application on your behalf once you have received the Authority to Proceed Form from the help to buy agent.

For more information and a full step by step guide through to completion, please view the Help to Buy Buyer’s Guide or visit www.helptobuy.gov.uk

Next steps

Read our other Mortgage Guides.

Try our Mortgage Calculator.

‘How much can I borrow for a mortgage?’

Complete our contact form below to get our expert help.

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