Help to Buy - Shared Equity Scheme
With a Help to Buy equity loan the Government lends you up to 20% of the cost of your new build home. You will need a minimum of a 5% deposit and a 75% mortgage to make up the rest.
You will not be charged loan fees on the 20% loan for the first five years of owning your home. From year six, a fee of 1.75% is payable on the equity loan, which rises annually by RPI inflation plus 1%.
The scheme is only available on new-build properties from a participating, registered builder. You must meet the Help to Buy affordability requirements as well as the lender's affordability criteria.
These loans are not available for Buy To Let landlords, second home owners or shared ownership properties.
If the home in the example above sold for £210,000, 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.
Help to Buy - Shared Equity Scheme - London
Reflecting the property prices in London, from 1st February 2016 the Government increased the upper limit for the equity loan from 20% to 40% for new home buyers within Greater London.
With London Help to Buy you’ll need to contribute at least 5% of the property price as a deposit, the Government will give you a loan for up to 40% of the price and you’ll need a mortgage of up to 55% to cover the rest.
Example: Equity Loan of 40% on property value of £400,000
Help to Buy - ISA
If you are saving to buy your first home, save money into a Help to Buy ISA and the government will boost your savings by 25%. So, for every £200 you save, you will receive a government bonus of £50. The maximum government bonus you can receive is £3,000.
How long will Help to Buy ISA's be available for?
You’ll be able to open a Help to Buy ISA until 30 November 2019. After that date they won’t be available to new savers anymore – but if you opened your Help to Buy ISA before then you can keep saving into your account until 30 November 2029 when accounts will close to additional contributions.
You must claim your bonus by 1 December 2030.