Help to Buy is a government-funded scheme designed to help people get onto the property ladder. An equity loan can be used to support the purchase of a new-build home.
Wales and England have different versions of the scheme.
A leg-up onto the property ladder
If you’re finding it difficult to save enough deposit to fund the purchase of a home, then the Help to Buy loan could be suitable for you.
What is Help to Buy?
Help to Buy Wales
Help to Buy – Wales provides a shared equity loan to buyers of new-build homes. The scheme supports the purchase of homes up to £250,000 (from April 2021) bought through a registered Help to Buy — Wales builder. How it works With Help to Buy — Wales: you must provide a 5% deposit the scheme provides a shared equity loan of up to 20% of the purchase price you must take out a repayment mortgage to cover the remaining amount.
| For a property worth £200,000 | Amount | Percentage |
|---|---|---|
| Cash deposit | £10,000 | 5% |
| Shared equity loan | £40,000 | 20% |
| Your mortgage | £150,000 | 75% |
Help to Buy England
If you’re a first-time buyer in England, you can apply for a Help to Buy: Equity Loan. This is a loan from the government that you put towards the cost of buying a newly built home. You can borrow a minimum of 5% and up to a maximum of 20% (40% in London) of the full purchase price of a new-build home. You must buy your home from a homebuilder registered for Help to Buy: Equity Loan. The amount you pay for a home depends on where in England you buy it.
| Region | Maximum property price |
|---|---|
| North East | £186,000 |
| North West | £224,000 |
| Yorkshire and the Humber | £228,000 |
| East Midlands | £261,000 |
| West Midlands | £255,000 |
| East of England | £407,000 |
| London | £600,000 |
| South East | £437,000 |
| South West | £3349,000 |
The equity loan, the deposit you have saved, and your repayment mortgage cover the total cost of buying your newly built home. The percentage you borrow is based on the market value of your home when you buy it. You do not pay interest on the equity loan for the first 5 years. You start to pay interest in year 6, on the equity loan amount you borrowed. The equity loan payments are interest only, so you do not reduce the amount you owe. You can repay all or part of your equity loan at any time. A part payment must be at least 10% of what your home is worth at the time of repayment.
What should I keep in mind?
There are a number of conditions that you should be aware of if you’re thinking of purchasing a home through a Help to Buy scheme.
You should know that:
- You will need to pay back the equity loan after 25 years or when the property is sold
- You’ll start paying interest on the equity loan after years
- If you’re purchasing with someone else, you must apply together. You should both be first-time buyers
- You’ll start paying interest on the equity loan after years
You should also be aware that:
- You can only take out a repayment mortgage with a qualifying lender
- Only qualifying new build developers can participate in the scheme
- You won’t be able to sublet or rent out your property until the equity loan is repaid.
How can Trulife help?
Trulife can help you assess your eligibility for the Help to Buy scheme so that you can decide if it’s the right option for you.
We'll offer insight on:
Applying for the Help to Buy scheme
Repayment terms and conditions
Finding qualifying new build developers and mortgage lenders
What next?
If you’re thinking of applying for the Help to Buy scheme, talk to Trulife. We’ll quickly connect you with a member of the Trulife team and give you guidance on all things Help to Buy.