The Government lends you up to 20% of the cost of your newly built home, so you’ll need a 75% mortgage to make up the remainder of the purchase price. The Help to Buy: Equity Loan is interest-free for 5 years and can be repaid at any time or on the sale of the home. The 20 per cent equity loan is interest free for 5 years’ and in year 6 a fee of 1.75 per cent of the loan is charged, paid monthly by direct debit. The fee increases annually by the Retail Price Index (RPI) + 1 per cent. The loan can be repaid at any time at an amount equal to 20 per cent of the market value, whether the property value has increased or decreased.
Partial repayments are allowable at a minimum amount of 10 per cent of the market value at the time of repayment. The loan must be repaid on the sale of the property or after 25 years, whichever comes first.
The Government has announced a new Help to Buy scheme to run 1 April 2021 until 31 March 2023. It is restricted to first-time buyers and includes regional property price caps to ensure the scheme reaches people who need it most. As with the current scheme, under the new scheme, the government will lend buyers up to 20% of the cost of a newly built home.
YOUR home may be repossessed if you do not keep up repayments on your mortgage. A set fee may be payable upon completion of the mortgage when you buy through the Help to Buy: Equity Loan scheme.
You will need to put down a 5% deposit£15,000
A Help to Buy Equity loan will contribute 20%£60,000
You will need a mortgage for the remaining 75%£225,000
This usually means that a successful applicant will finance the greater share of the property through a mortgage and personal savings. And the council, or a nominated housing association, will finance the lesser share.
The exact share available to own will depend on the criteria of the property offered under the scheme, but this will typically be 70%. As this is a shared equity arrangement you won’t have to pay rent on the share that you do not own.
You will repay the share you don’t own when you sell the property or buy it outright. This will be based on the current market value at the time.
Usually the scheme runs on the shared equity model but occasionally an ownership opportunity becomes available. This differs from the shared equity in that the successful applicant would pay a discounted rent on the percentage of the property that they do not own. This allows you to buy further shares (known as ‘staircasing’). This means you could achieve 100% ownership depending on the terms of the lease.
Some properties will become available when existing owners who have bought through the scheme decide to sell. We refer to these as resales.
If you bought through the scheme and now wish to sell your property, you must let us know first so that we can find a buyer from the list of applicants on the scheme. If we are unable to find a buyer for your property within a given time, you are free to sell your property on the open market and repay the council or housing association the agreed share of the purchase price.
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