With a Help to Buy Equity Loan the Government lends you up to 20% of the cost of your newly built home, so you’ll only need a 5% cash deposit. Stewart Financial will help you to source a 75% mortgage to make up the rest.

A common myth is that the Help to Buy scheme is only available to First Time Buyers, however this is not the case. The Help to Buy Equity Loan Scheme caters to Home Movers as well as First Time Buyers and can be a much more affordable way of purchasing a property. The scheme allows you to place a 5% deposit on a property whilst the Government lend you up to 20% of the rest of the deposit.

Many clients ask what the difference is between this and just placing a 5% deposit and borrowing the remaining 95% from the bank. In essence because you are only borrowing 75% of the property’s value the Help to Buy Equity Loan Scheme can make monthly mortgage payments a lot more affordable, also resulting in less borrowing against your credit profile.

Please note the 20% equity loan is interest free for the first 5 years of the mortgage term and then will be subject to interest.

If you purchased a home valued £200,000

If the home in the example above sold for £210,000, you’d get £168,000 (80%, from your mortgage and the cash deposit) and you’d pay back £42,000 on the loan (20%). You’d need to pay off your mortgage with your share of the money.

London Help to Buy
To reflect the current property prices in London, from February 2016 the Government has increased the upper limit for the equity loan it gives new home-buyers within Greater London from 20% to 40%.

To find out more about Help to Buy, please get in contact today