How to understand Help to Buy: Equity Loan
The Help to Buy: Equity Loan scheme was announced by the Government in March 2013.
Under Help to Buy, any borrower, be they a first- or subsequent-time buyer, with any level of income and a 5% deposit is given an equity loan of up to 20% of the property’s value to buy a newly-built home worth up to £600,000.
You then take out a mortgage for the remaining 75% from a participating mortgage lender.
The equity loan is interest-fee for the first five years, and the government, which has a 20% stake in the property, shares in any increase or decrease in the value of the property.
In March 2012 the government pledged £3.5bn to this part of the scheme, in a bid to boost homebuying and housebuilding.
You cannot arrange a Help to Buy mortgage directly with the lender, but need to go through an intermediary. Speak to an independent financial adviser or mortgage broker who will be happy to talk you through your Help to Buy options
Click here for a government guide to Help to Buy Equity Loans