The Help to Buy: Equity Loan scheme means the Government lends you up to 20% (40% in London) of the price of your newly built home through the Homes and Communities Agency (HCA). This loan makes it more affordable for people to purchase their own home. The equity loan is interest free for the first five years of owning your home.

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Things to consider

Buying a Help to Buy Equity Loan Home

The Help to Buy: Equity Loan helps you purchase a newly built home by giving you an interest-free loan of up to 20% (40% in London) of the total property value.

To purchase a new home with an equity loan you will need to get approval from the local Help to Buy agent in the area you want to live. You will also need to buy your home from a registered Help to Buy Developer/Housing Association. Your Help to Buy agent will have a list of registered builders for you to choose from.

You will pay a monthly management fee of £1 for the length of your Help to Buy home ownership. After five years, you will need to pay interest on your equity loan. This interest fee is currently 1.75% per year on the outstanding amount of the equity loan. This will increase each year, after the first five years, by the increase in the Retail Price Index plus 1%.

Your Help to Buy agent will provide you with a Personal Working Example (PWE) setting out your future payments.

Help to Buy Equity Loan Voluntary Payments

Similar to the Shared Ownership scheme, you are able to repay all or part of your equity loan by staircasing. These payments can be made at any time, however they must be a minimum of 10% of your home’s current market value. You will need to get an independent valuation of your property.

If you decide to extend your mortgage to fund the full or part repayment of your equity loan, you will need to get approval from the Agency’s Mortgage Administrator first.

Help to Buy Charge

If you are buying a flat, you will be buying a leasehold property with the right to occupy and use your property for a set period of time- referred to as “the term”.

The lease is a legally binding contract between you, the leaseholder, and the Landlord. As with most residential leases, the lease covers the rights and responsibilities of the Landlord, you the leaseholder, what you can and can’t do.

Buying your property with Help to Buy you have an equity loan from Homes England and this will require you to sign an equity charge with them, There is a lot more additional work for us to undertake to ensure that we meet the requirements of the Help to Buy equity loan and to ensure we accurately register the loan with the Land Registry on your title documents. This is known as a charge on your property. We will explain this to you.

Stamp Duty Land Tax (SDLT)

You must pay Stamp Duty Land Tax (SDLT) if you buy a property or land over a certain price in England and Northern Ireland. The Tax is different if the Property or Land is in Scotland or Wales. The current SDLT threshold is £125,000 for residential properties.

There are different rules if you’re buying your first home. here are different rules if you’re buying your first home. You get a discount (Relief) which means you pay less or no tax if: You complete on or after 22 November 2017; the purchase price is £500,000.00 or less; you and anyone else you’re buying with, are first-time buyers. To find out more about how much you pay visit: www.gov.uk/stamp-duty-land-tax

You pay the tax when you:

  • buy a freehold property
  • buy a new or existing leasehold
  • buy a property through a shared ownership scheme
  • are transferred land or property in exchange for payment, eg you take on a mortgage or buy a share in a house

You must send an SDLT return to HMRC and pay the tax within 30 days of completion. New Homes Law will file your return and pay the tax on your behalf on the day of completion and add the amount of our fees.

How it works

Step 1

Liaise with a mortgage broker and get an agreement in principle.

Step 2

Complete a Help to Buy Property Information form.

Step 3

Reserve a property with the Developer/Housing Association.

Step 4

Receive a list of preferred conveyancers.

Step 5

Appoint a conveyancer.

Step 6

Apply for a mortgage with your mortgage broker.

Step 7

Developer/Housing Association sends out Memorandum of Sale (confirmation of your reservation).

Step 8

Authority to proceed issued by Help to Buy agent.

Step 9

Developer/Housing Association’s conveyancer issues Contract.

Step 10

Your conveyancer raises and enquiries they need.

Step 11

Developer/Housing Association’s conveyance responds to our enquiries.

Step 12

Mortgage offer issued (if required).

Step 13

Authority to Exchange received by the Help to Buy agent.

Step 14

Exchange within 28 days of the issue of contracts.

Step 15

Completion – this is either a fixed date or once notice is served (approx. 5-10 days from Build Complete).

Things to know

You need approval of your purchase from your local Help to Buy agent.

You must purchase your home from a registered Help to Buy Developer / Housing Association.

Your cash deposit must be at least 5% of the full purchase price.

You will start paying interest on the loan after 5 years.

The Equity Loan must be paid back after 25 years, or when you sell your home (whichever is earliest).

An Authorisation to Proceed is valid for three months.

You must legally complete on your purchase within six months of exchanging contracts.

The team behind helping you buy with a Help to Buy Equity Loan

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