Explained by Premier Financial Group
Help to Buy equity loans are open to both first-time buyers and home movers on new-build homes worth up to £600,000. You won’t be able to sub-let your home if you use this scheme.
How it works With a Help to Buy equity loan:
- You’ll need to contribute at least 5% of the property price as a deposit
- The government will give you a loan for up to 20% of the price
- You’ll need a mortgage of up to 75% to cover the rest
- Help to buy charges £1 per month to be part of the scheme
- When you pay back the loan, you pay 20% of the current value of the property (whether it increases or decreases)
Equity loan fees:
You won’t be charged loan interest for the first 5 years of owning your home. In the 6th year, you’ll be charged an interest of 1.75% of the loan’s value.
After this, the fee will increase every year. The increase is worked out by using the Retail Prices Index plus 1%. Your Help to Buy agent will contact you before the fees start, to set up monthly payments with your bank. You will also be sent a statement about your loan each year. Interest doesn’t count towards paying back the equity loan.
So if you’re dreaming of buying, now’s the time to take advantage of Help to Buy!
Find out more from Premier Financial Group here.