If you are considering using the help to buy scheme to purchase a new build home next year, then read on as the current scheme is due to end on 31st March 2021.
As of 1st April 2021, the existing help to buy scheme will be replaced by a new one with some changes. Prices will vary by region and the new scheme will only be available to first-time buyers.
What are Help to Buy Equity Loans?
Help to Buy Equity Loans were introduced by the government in 2013 with the aim of helping people get on the property ladder. It’s important to realise there are different Equity Loan schemes for England, Greater London, Wales and Scotland, and they all differ slightly.
Here is a summary of the Help to Buy Equity Loan scheme:
- The current scheme is open to first-time buyers and existing homeowners. It’s only available on new build homes, up to a maximum purchase price of £600,000.
- The government will lend you up to 20% of the cost of your new build home. Or up to 40% if the property is in London. This is called an equity loan.
- You’ll need to save a minimum of 5% of the purchase price as a deposit. The remaining 75% comes from a specialist Help to Buy mortgage product.
- The equity loan is interest-free for the first five years and you don’t need to make any repayments on it during that time.
The new scheme will run from April 2021 to March 2023. The government will still lend you up to 20% of the cost of a newly built home or 40% in London. However, there are some major changes from the existing scheme:
- Only first-time buyers will be able to use the new Help to Buy Equity Loan scheme
- New regional price caps will be introduced. As a result, the maximum value of homes that can be bought with the scheme’s help will be dramatically cut in most areas.
For us in the East of England, it means the maximum price you can buy using the loan will be £407,400.
For more information speak to our home buying executives on 07388 673364.