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5 June 2019

How does the ‘Help to Buy’ scheme work?

If you’re looking to take that first step on to the property ladder or already a homeowner and wanting to move into a larger new-build property, the government backed ‘Help to Buy’ scheme provides the perfect solution, where you can make your move in to a new-build property with just a 5% deposit. 

It’s good to note that the ‘Help to Buy’ scheme is currently planned to end in 2023, so with these changes taking place in 2 years’ time, if you did want to start the ball rolling in purchasing your dream new-build home, there’s never been a better time to buy!

First introduced in 2013, the Help to Buy scheme has helped thousands of people move into their dream new-build home. The Equity Loan scheme offers first time buyers and existing homeowners the opportunity to take out a loan through the Homes and Communities Agency (HCA) of up to 20% of the cost of your newly built home, which will remain interest free for the first 5 years of owning your home. 

You must repay the equity loan after 25 years, or earlier if you sell your property. It’s also good to note you will need to repay the same percentage share of the proceeds of the sale of your property as that of your initial equity loan (i.e. if your equity loan was 20% of the purchase price, then you will need to repay 20% of the process from your property sale).

With the government lending you 20% of the cost of your new-build home up to a purchase price of £600,000, it means you’ll need to get together a minimum 5% cash deposit and then a 75% mortgage to make up the remaining amount. With your equity loan and your cash deposit added together it could mean access to a wider range of lower rate mortgages meaning cheaper monthly repayments.

For example, if you bought a home that cost £200,000:

  • You would need a 5% buyers deposit of £10,000
  • You could get a 20% equity loan of £40,000
  • You would need a mortgage for the remaining 75%, which would be £150,000

For many, this scheme offers a much more affordable home ownership solution, although it’s good to bear in mind the scheme comes to an end in 2023, and from 2021 it will only apply to first time buyers purchasing newly built homes. 

Who is Eligible?
The equity loan scheme is available to anyone looking to move into a new build home and is in a position to afford a mortgage and have access to a minimum 5% cash deposit. The property you are wanting to buy must be below £600,000 and is not to be used as a buy-to-let property.

To qualify for a Help to Buy: Equity Loan you must:

  • Have a minimum of 5% cash deposit of the property’s value
  • Be able to afford monthly mortgage repayments 
  • Choose a property no more than £600,000 and must be a new-build
  • Be no older than 75 years of age - as this impacts the mortgage

How to Apply
If you are interested in the ‘Help to Buy’ scheme, start by contacting one of the government appointed ‘Help to Buy’ agents in your area who will be able to assist and guide you through the application process. You can also look out for the ‘Help to Buy’ logo on new-build developments and ask about the scheme there.

You’ll find many of the new build properties we feature on the Simply New Homes website offer ‘Help to Buy’ as an option. To find out more about the participating new-build developments in Sussex, Surrey and Hampshire, please call us on 01243 521 833 to speak with one of our friendly and knowledgeable team or visit the website to search for your dream home.


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