If you’re a first time buyer in England, you can apply for a Help to Buy: Equity Loan.

The Help to Buy: Equity Loan is a great way into home ownership when you only have a small deposit available. Under the government backed scheme you can borrow 40% of a property’s value (20% outside London) as long as you can provide a further 5% of the value as deposit. You would then need to secure a mortgage for the remaining 75% (55% in London).

As an example, if you were to buy a qualifying home for £200,000 the Help to Buy Equity Loan on a home outside of London would cover 20% of the value (£40,000). You would need to contribute 5% to the deposit (£10,000) you would then require a mortgage for the remaining 75% of the value (£150,000).

If you decide to sell your home at a later stage, the same percentages apply. For example, if the value had risen to £210,000 the government would be due £42,000 (20% of £210,000) and you would receive £10,500 (5% of £210,000) plus £157,500 (75% of 210,000) a total of £168,000 from which you would need to pay of whatever was left on the mortgage.

You will not have to pay any fees on the loan for the first five years and you have to meet the criteria below to qualify:

  • The home you you want to buy must not cost more than £600,000
  • The home you you want to buy is to live in and will not be a buy to let property
  • You must not own any other property at the time you buy your new home

Watch the video below to see how it all works:

Detailed information on Help to Buy Equity Loans: https://www.helptobuy.gov.uk/equity-loan/equity-loans/

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