Help To Buy Equity Loan: All You Need To Know In 2023
Help To Buy Equity Loan: All You Need To Know In 2023
What is Help To Buy Equity Loan?
Help to Buy Equity Loan is a government-run scheme that helps first-time buyers, existing homeowners, and people with a shared ownership purchase a newly built home. Under the scheme, the government lends buyers up to 20% of the property’s value as an equity loan, interest-free for five years as long as you live in the property.
How Does Help To Buy Equity Loan Work?
To take advantage of the scheme, you must purchase a newly built home that is valued at up to £600,000. You must then provide a 5% deposit and secure a mortgage of up to 75% of the purchase price. The government will then provide you with an equity loan of up to 20% of the purchase price, interest-free for the first five years.
What Happens After Five Years?
After five years, an annual fee of 1.75% of the total loan amount will apply to the loan. This fee will increase each year in line with the Retail Price Index (RPI) plus 1%. You can pay off the loan at any time, but the amount you owe will increase if the value of your house has risen.
Who is Eligible for Help To Buy Equity Loan?
The Help to Buy Equity Loan scheme is open to all first-time buyers, existing homeowners, and people with a shared ownership purchase. You must also be purchasing a newly built home that is valued up to £600,000. You will also need to have a 5% deposit and secure a mortgage of up to 75% of the purchase price.
Advantages of Help To Buy Equity Loan
The Help to Buy Equity Loan scheme can help you get onto the property ladder more easily and quickly. With the government lending you up to 20% of the purchase price, you can reduce the amount of money you need to save for a deposit. The loan is also interest-free for the first five years, so you don’t need to worry about any additional costs.
Disadvantages of Help To Buy Equity Loan
The scheme is only available on newly built homes, so if you are looking to purchase an existing property, it won’t be suitable. You will also need to pay a fee of 1.75% of the total loan amount after five years, so you need to factor that into your budget. Finally, the amount you owe will increase if the value of your house rises, so you need to be aware of that.
Conclusion
The Help to Buy Equity Loan scheme can be a great option for first-time buyers, existing homeowners, and people with a shared ownership purchase looking to buy a newly built home. However, you need to be aware of the fees and the fact that the amount you owe will increase if the value of your house rises. If you are looking for help to buy a property, this could be a good option for you.
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