Help to Buy is equity loan assistance to home buyers from Homes England.
Help to Buy makes new build homes available to all home buyers who wish to buy a new home, but may be constrained in doing so. For example as a result of deposit requirements – but who could otherwise be expected to sustain a mortgage.
Help to Buy has been available since 2013. In November 2015, Government announced an extension of the initiative up to 2021. It may close earlier if all of the funding is taken up before 2021.
How much can be borrowed
Up to a maximum of 20% in England (40% in London) of the purchase price is available to the buyer through an equity loan funded by the Government through Homes England. Help to Buy is available in England from house builders registered to offer the scheme.
The maximum you can borrow from Help to Buy in England is £120,000 and up to £240,000 for London. There is no minimum amount.
Buyers must provide a deposit of a minimum of 5% of the full purchase price of the home bought under this scheme.
After five years you will be required to pay an interest fee of 1.75% of the amount of your Help to Buy Equity Loan at the time you purchased your property. Rising each year after that by the increase (if any) in the Retail Prices Index (RPI) plus 1%.
The loan itself is repayable after 25 years or on the sale of the property if earlier. You must pay a monthly management fee of £1 per month from the start of the loan until it is repaid. The total amount repayable by you will be the proportion of the market value of your home that was funded by this loan, plus interest and charges.
The amount you will have to repay under the loan agreement will depend on the:
- market value of your home when you repay the Help to Buy equity loan
- rate of inflation in the meantime
In Cornwall, the Help to Buy Equity Loan is administered by the local Help to Buy Agent.