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Help to Build scheme open to applications this winter

Christina Hoghton
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Christina Hoghton

Self-builders will be able to get a 20% interest-free equity loan alongside their deposit and mortgage

Help to Build, the government’s latest equity loan scheme, has launched offering self and custom builders the opportunity to start their homebuilding project with a minimum of five per cent deposit.

To apply, borrowers must first secure a self-build mortgage with a lender registered with the scheme, or through a broker who can arrange the deal. After that they must complete an application for Help to Build through Homes England.

If their application is successful, borrowers will receive an equity loan.

An equity loan of up to 20 per cent is available, which rises to 40 per cent in London. The balance of 75 per cent, or 55 per cent in London, is funded via a self or custom-build mortgage.

The loan amount is based on the estimated cost to buy the land required to build the property on.

If borrowers accept the equity loan offer they will have three years to buy the land and build their home.

Raymond Connor, chief executive of BuildLoan, said: “We have been waiting for Help to Build for a long time and, now that it’s here, we expect it to be extremely popular.

“The fact that people only need to find a five per cent deposit by using this scheme, instead of typically 20 to 25 per cent without it, is an extremely attractive proposition.”

To be eligible, borrowers must be aged 18 or over and have the right to live in England. They must live in the newly-built home as their only home and use a self-build mortgage from a lender registered with the scheme.

The government has allocated £150m to scheme to be used over the next four years unless demand is high and the funding runs out before then.

The total cost of the project including land is capped at £600,000, with a maximum limit of £400,000 for the build costs. This excludes professional fees, such as architect’s designs, planning and engineer’s reports which must still be funded separately.

“Brokers should familiarise themselves with the Help to Build equity loan scheme, as I can guarantee there will be lots of interest from people wanting to build their own home,” added Connor.

“BuildLoan will be working with our lender partners to develop products to support the scheme and make sure we are ready to lend as soon as we get the green light.”

Applications for Help to Build will be open from winter 2021.