Help To Buy Factsheet

Help To Buy Equity Loan

In his budget speech the Chancellor announced two new proposals for homebuyers under the inventive title of “Help to Buy”.

From 1st April 2013, the “Help to Buy : Equity Loan” was opened to all those who aspire to own a new build home. It will replace and build on the principles of the “First Buy scheme.

The Government will:

  • Provide an equity loan worth up to 20% of the value of a new build home, repayable once the home is sold.
  • significantly widen the eligibility criteria to ensure as many people as possible are able to benefit. The maximum home value will be £600,000 and there will be no income cap constraint
  • ensure that the scheme is open not only to first time buyers but also to all those looking to move up the housing ladder.

The “Help to Buy: Equity Loan” will be open for the next three years, which the government anticipate will provide £3.5 billion of investment in England, supporting up to 74,000 more home buyers as well as providing a boost to the construction sector. The scheme will apply in England only. A share of the money will be allocated to the devolved administrations for them to use on their own schemes.

Help To Buy Mortgage Guarantee

The second scheme, a Government guarantee, will encourage lenders to offer better access to low deposit mortgages. This will be paid for by fees charged to lenders in such a way that they compensate the Government for expected losses, the cost of capital and administrative costs. The “Help to Buy : Mortgages Guarantee” will, subject to the final design, make available up to £12 billion of government guarantees, sufficient to support up to £130 billion of high loan-to- value mortgages.

The devil is in the details on this scheme, although details are still being finalised we do know the following;

  • Available from January 2014, this scheme will run for three years
  • New build and existing homes
  • You’ll need a deposit of as little as 5% for this scheme
  • Available to first time buyers and existing home owners.
  • You’ll need to secure a mortgage for your purchase. The Government guarantee will encourage lenders to offer better access to low-deposit mortgages.
  • Maximum home purchase of £600,00.

These new schemes will sit alongside the existing Newbuy schemes.