HELP TO BUY EQUITY LOAN (2021 – 2023)
The Help to Buy Equity Loan (2021 -2023) is a Help to Buy Mortgage and is an equity loan scheme provided by the government. The Help to Buy equity loan applies to first-time buyers only, meaning if you have ever owned a property, including being added to the title deeds or via an inheritance, anywhere in the world, at any point of your life, irrelevant of how long ago it was, the scheme will not apply to you.
There are some key elements to this process. You must have had your affordability checked and your help to buy equity loan agreed before making any application to a mortgage lender.
Usually, once you have found a property, the developer will ask for a reservation fee in order to secure the property. You will be provided with a “reservation form” which holds all of the information required to obtain your help to buy equity loan.
To apply for a help to buy equity loan a “PIF” (Property Information Form”) will need to be completed.
When it comes to Help to Buy, we are proven experts at knowing the help to buy equity loan mortgage process for first time buyers inside out, and have access to all of the relevant forms and most importantly will pair you with the correct mortgage lender everytime!
Help to Buy: Equity Loan
A help to buy equity loan is a type of Help to Buy Mortgage.
You receive an Equity Loan from the Government, for either 20% (Outside of Greater London) or up to 40% (Within Greater London) of the cost of your newly built home, so you’ll only need a 5% deposit as a minimum. You can choose to put down a bigger deposit, therefore taking a smaller equity loan if that is your preference.
You won’t be charged loan fees on the help to buy equity loan for the first five years of owning your home.
See our latest YouTube video on the Help to buy Equity Loan 2021, to the right. >
HELP TO BUY EQUITY LOAN TIPS
- This is for first time buyers only
- There are currently help to buy regional price caps
- This only applies to New Build properties
- Look out for the Help to Buy Scheme logos on the developer’s and online property sites
- Double check with the Developer they have the help to buy funding
- It is vital to choose an appropriate mortgage lender
- Ask the developers for confirmation of their process
- You can search for Properties >> Online here or
- Rightmove >> Click here
- Zoopla >> Click here
Who can take part in the scheme ?
The help to buy equity loan scheme is open to first time buyers only.
Buyers using the scheme outside of London must be able to fund up to 80% of their selected property through a conventional mortgage and deposit.
London buyers using the scheme must be able to fund 60% of the property through a conventional mortgage and deposit.
Buyers must always provide a 5% deposit contribution (5% of the full purchase price).
Buyers must take out a first charge mortgage with a qualifying lender.
The maximum purchase price is £600,000 (London) and has regional price caps as shown in belows table.
| Help to Buy: Equity Loan price caps – April 2021 to March 2023 | |
|---|---|
| Region | Maximum property price |
| North East | £186,100 |
| North West | £224,400 |
| Yorkshire and the Humber | £228,100 |
| East Midlands | £261,900 |
| West Midlands | £255,600 |
| East of England | £407,400 |
| London | £600,000 |
| South East | £437,600 |
| South West | £349,000 |
The Local Help to Buy Agent (see below) will carry out an assessment of an application by a potential Help to Buy buyer to ensure that they are in a position to afford a conventional mortgage for their proposed purchase. This protects tax payers’ investment in the Help to Buy home.
Buyers cannot use the scheme if they require a main mortgage more than 4.5 times their
household income.
The property purchased must be your only residence. Help to buy is not available to assist buy-to-let investors or those who will own any property other than their Help to buy property after completing their purchase.
You cannot rent out your existing home and buy a second home through Help to Buy.
Help to buy equity loan calculator 2021 – help to buy sustainability calculation
The help to buy equity loan calculator 2021 is available to download on the government’s website but is intended for use by qualified mortgage advisors when assisting and advising on the possibilities of a help to buy equity loan.
Maximum borrowing
The calculation will take into account a maximum borrowing of 4.5 X your income on the main mortgage. You can not exceed this borrowing. You will then have the equity loan on top, which monthly payments will then be factored into the affordability calculation of the total borrowing.
Debt to income ratio
The calculation will also factor in how many unsecured debts you have, against your income. This will be calculated as a percentage and assesses typical property related costs. This calculation ensures that buyers do not commit more than 45% of their net income towards the costs of the debt, leaving 55% of net income to go towards living costs.
To see if you qualify for a help to buy equity loan Mortgage, please book a free, no obligation help to buy Analysis Call with us to discuss your options.