First-time buyers can apply for new Help-to-Buy: Equity Loan (2021-2023) scheme from 16 December 2020.
The new Help to Buy loan from Homes England allows first-time homebuyers who are eligible for an equity loan to borrow up to 20% (40% in London) of the purchase price of a newly-built home. Customers pay a deposit of 5% or more and arrange a mortgage of 25% or more to make up the rest.
Buyers will not be charged interest on the equity loan for the first 5 years. Interest fees start at 1.75% and rise each year in April by the Consumer Prices Index (CPI) plus 2%. Buyers pay a monthly management fee of £1 for the life of the equity loan.
Homebuilders are getting into contract for the new scheme and starting to market their new build homes. Buyers are advised to check with their homebuilder that they are registered for the scheme before applying.
Eligible first-time buyers will be able to reserve their homes from mid-December and get the keys to move in from 1 April 2021.
Housing Secretary Robert Jenrick said:
“The Government is providing more ways to help families onto the housing ladder, and provide that life-changing moment when you get the keys to your own home.
Alongside First Homes, Shared Ownership and our £12bn investment in affordable housing, our new Help to Buy scheme will help thousands more families take their first step into a home of their own.”
Will German, Director of Help to Buy at Homes England, said:
“Help to Buy has already helped more than 270,000 people into home ownership and 82% are first-time buyers. The new Help to Buy builds on this success with first-time buyers in front of mind.
We’re pleased we can help homebuyers with smaller deposits to own a home, at a time where there are fewer options open to them. Housing, like most sectors, has experienced a slowdown during the Covid-crisis. But Help to Buy continues to give homebuilders the confidence to keep on building at a more crucial time than ever.”