Your Mortgage Hub are proud to work with and support Ashwood Homes, providing expert mortgage advice to their buyers, and supporting them through their house buying journey. We find, one of the most popular topics around buying a new build property, is the Help To Buy Equity Loan Scheme, so we’ve put together some of the most commonly asked questions around the scheme, and provided answers and clarification
What is the Help To Buy Equity Loan Scheme?
This scheme was introduced in 2013 and was designed to help buyers meet the lenders stricter deposit requirements for a mortgage on a new build property, by providing a deposit top-up of up to 20 per cent of the property purchase price. This would mean a buyer would be able to contribute five per cent from their own sources, use 20 per cent from the equity loan, and have a 75 per cent mortgage, meaning they would benefit from lower interest rates, and to make the mortgage payments more affordable.
Can I put more than five per cent deposit down?
Yes, although the minimum deposit is five per cent, you can actually put up to 55 per cent deposit down, and still use the 20 per cent equity loan, as ultimately you must have a minimum 25 per cent mortgage.
What are the eligibility requirements for the scheme?
The requirements are threefold: You must be buying a new build property from a company that is registered for the Help To Buy Scheme (like Ashwood Homes are) You must not own any other properties on completion of the new property (meaning you can buy and sell simultaneously and still be eligible) You must meet the affordability guidelines as set out by the Help To Buy agency (Your Mortgage Hub can check this for you)
I’m not a First Time Buyer, can I still use the scheme?
Yes, the scheme is currently open to both First Time Buyers and Home-Movers, however, the current government guidance is that it will be only available to First Time Buyers for completions after March 31, 2021, until March 31, 2023.
How long can I have the Equity Loan for?
You can have the equity loan for up to 25 years, or if your mortgage term is less than 25 years, the equity loan term will match the mortgage
What will the monthly repayments be on the Equity Loan?
For the first five years, you will only pay an admin charge of £1 per month, and from year six onwards you will pay interest only, at a rate of 1.75 per cent, which will increase by inflation each year. For example, if you buy a £200,000 property, then the equity loan would be £40,000, and therefore the monthly interest in year six would be approximately £58 per month, and inflationary increases in year seven might make it £61 per month, and in year eight, £64 per month...