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Only got a 5% deposit - Extension to Government's Equity Loan Scheme could help you buy?

August 10, 2020Categories: Buying, Financial / Mortgages
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The government has recently announced that the deadline for its Help to Buy Equity Loan programme has been extended from December 31st 2020 to February 28th 2021 meaning that, despite the disruption caused by the coronavirus, there’s still a chance for potential homeowners to benefit from it.

The Scheme, which was launched in 2013, is designed to help those who may be struggling to raise a high deposit to buy with the government offering a 20% equity loan (or up to 40% in London) provided a deposit of just 5% could be raised by the homebuyer and the remaining funds secured through a mortgage.  The total of the deposit, loan and mortgage can then be used to buy a new build property, provided it’s the only property that will be owned by the buyer.

Originally the new build property itself would have had to be completed by the end of the year for the buyer to benefit from the Scheme but, in light of recent events and delays in housebuilding, the extension has been granted to allow more time for the property to be built – although the legal completion of the sale remains as 31 March 2021.

Andrew Kidd, who is a Financial Consultant for Embrace Financial Services (who work in partnership with Your Move), commented:

“The Help to Buy Equity Loan Scheme is really good and I’ve helped numerous buyers, both first timers and existing homeowners, to benefit from it.

The good news, in particular, is that the government loan is interest free for the first five years and only a £1 monthly management fee is payable.  It’s not until year 6 that a monthly interest fee of 1.75% of the equity loan has to be paid, which rises in line with the Retail Price Index each April and which continues to be payable until the loan is repaid.  You only have to repay the loan when you pay off your mortgage, sell your home or you come to the end of the equity loan term and can even pay off chunks of it (or all of it)  if you feel able during that term.

I’d recommend anyone who is looking to buy a new build property to consider speaking to an independent mortgage advisor to find out more, remembering it’s not only for First Time Buyers.”

If you’d like to find out how much you may be able to borrow under the Help to Buy Equity Loan Scheme, check out our handy Help to Buy Calculator or why not book an appointment with a financial consultant to find out more.

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(*) The Help to Buy Equity Loan Scheme is only available in England however similar schemes are available in Scotland and Wales

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Embrace Financial Services usually charges a fee for mortgage advice. The amount of the fee will depend upon your circumstances and will be discussed and agreed with you at the earliest opportunity.