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The new Help to Buy Equity Loan scheme: here’s everything you need to know

Here’s what you need to know….


What is the Help to Buy Equity Loan scheme?

The Help to Buy Equity Loan scheme was launched by the government in 2013. It was one of a number of measures introduced to help people get on the housing ladder. 

There are different Help to Buy Equity Loan schemes for England, Greater London, Wales and Scotland. They all vary; the below information relates to England and Greater London only.

How the Help to Buy Equity Loan Scheme works: 

  • When you buy a home through the scheme, the government lends you up to 20% of the cost of your new build home. This amount rises to up to 40% of the cost if the property is in London. This is called the Equity Loan.
  • You’ll also need to save at least a 5% deposit towards the cost of your home. And the remaining amount of up to 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 during that time.
  • It’s important to note that in order to use the Help to Buy Equity Loan scheme you’ll need to purchase your property from homebuilder registered with the scheme.


When does the new Help to Buy Equity Loan scheme start?

The new scheme from 1 April 2021 that will run until March 2023. It’s already open if you want to use it to reserve a home. However, you won’t be able to actually move into your new property until 1 April 2021 onwards.


Old scheme vs new scheme: what’s changing?

Many key features of the new scheme remain the same. The Government will still lend buyers up to 20% of the value of their new-build home. And this will still rise to up to 40% in London. However, there are some major changes:

  • Only first time buyers can use the new scheme. While it was overwhelmingly first time buyers who used the old Help to Buy Equity Loan scheme, some people who had previously bought property had taken advantage of it. You will not be able to use the new scheme if you’ve owned property before.
  • Regional price caps have been introduced. Anyone buying a home in England using the original scheme could purchase a property up to a maximum value of £600,000, regardless of where abouts the property was located. However, under the new scheme, regional price caps have been introduced. These have been set at 1.5 times the average first-time buyer price in each region, as of autumn 2018. Only those buying in London will continue to be able to buy property valued at up to £600,000. Elsewhere, the figure has been cut dramatically from £186,100 in the North East to £437,600 in the South East. 


Help to Buy: Equity Loan price caps – April 2021 to March 2023


Maximum property

North East


North West


Yorkshire and
the Humber


East Midlands


West Midlands


East of England




South East


South West





Key things to know about paying back your equity loan

There are some important factors to consider when it comes to Help to Buy Equity Loans.

  • When you take out your Equity Loan, you’re borrowing a percentage of your home’s value from the government. So if your Equity Loan is 20% of the value of the property when you buy it and the value of your home rises, you’ll need to repay 20% of the new value of the property when you sell it or pay off your equity loan, not the original amount you borrowed. Similarly, if the value of your property decreases, you’ll pay back 20% of the reduced value when you sell it or repay your Equity Loan, not the original amount.
  • The first five years of your Help to Buy Equity Loan are interest-free. However, in the 6th year you’ll be charged a fee of 1.75% on the loan’s value. After this, the fee will increase each year in line with inflation. The annual increase in the fees is worked out by using the Retail Priced Index (RPI) plus 1%. Your mortgage adviser can speak to you in more detail about this when they help you find the right mortgage.

For more information, feel free to 01293 525525 or [email protected]

Because we play by the book we want to tell you that…

Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1%, but a typical fee is 0.3% of the amount borrowed.

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