Help to Buy: Equity Loan

What is the Help to Buy: Equity Loan scheme?

This is a government scheme for first-time buyers. It provides a loan, called an equity loan, that you put towards the cost of buying a new build.

Help to Buy aims to help first-time buyers to get on the property ladder. If you’re eligible for an equity loan, you can borrow up to 20% (40% if you’re in London) of the market value of a new build.

During the term of the equity loan you only pay interest on the amount you borrowed. You do not pay off any of the loan itself. But you can choose to pay all or part of it off at any time. If you sell your home, you will need to pay off all of your equity loan. 

You can only apply for an equity loan if you reserve a new build from any of the homebuilders registered with the Help to Buy scheme (registered homebuilders).

Help to Buy (2021-2023) ends on 31 March 2023. Find out more about when the scheme is closing to new applications in our FAQs.

Maximum price for a home - 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 maximum property price is the full purchase price. You cannot change or negotiate this price.  

Your homebuilder will be able to confirm if the home you want to buy is within the price range. 
 
You must: 

  • pay a deposit of 5% of the purchase price of your new home at exchange of contracts, and
  • arrange a repayment mortgage of at least 25% of the purchase price of your new home.

You must repay your equity loan in full when one of the following happens: 

  • The equity loan term ends 

  • You pay off your repayment mortgage 

  • You sell your home 

  • We ask you to repay the loan in full (if you have not kept to the conditions of the equity loan contract). 

You cannot make regular monthly payments towards paying off the equity loan. However, you can pay off all of your equity loan, or make part payments, at any time. 

Any part payment you choose to make on top of a monthly interest payment must be at least 10% of the market value of your home at the time.

The equity loan is not interest-free. We do not charge interest for the first five years, but you will start to pay it from year 6.
 
An equity loan is secured against your property in the same way a repayment mortgage is. The Help to Buy: Equity Loan scheme is not regulated by the Financial Conduct Authority (FCA).

You may pay back more than you borrow

The amount you borrow is based on the market value of your new home when you buy it.  

When you repay some or all of your equity loan, the amount you pay is worked out as a percentage of the market value at that time.

If the market value of your home increases, so does the amount you have to repay. And if the value of your home falls, the amount you have to pay also falls.

Your home may be repossessed if you do not keep up repayments on your repayment mortgage, equity loan or other loans secured against it. Consider getting independent financial advice before making any financial decisions. 

You can find more information about the home buying process in our homebuyer’s guide to Help to Buy: Equity Loan (2021-2023)

Who can apply for a Help to Buy: Equity Loan?

You will need to meet the eligibility criteria to get a Help to Buy: Equity Loan.

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