- Mortgages
With the Help to Buy Equity Loan scheme, a buyer puts down a deposit of at least 5% on a new-build property and the government lends up to a further 20% – or 40% if you’re in London – creating a total deposit of 25%, or 45% for Londoners.
This part of the scheme doesn’t apply to properties that aren’t newly-built, and there’s a maximum purchase price of £600,000.
The government’s part of the loan is interest-free for the first five years.
From year six, you’ll be charged interest at 1.75%. The rate increases every year after that in line with the Retail Prices Index – RPI – inflation rate, plus 1%.
When you come to sell the property, as it’s an equity loan – rather than a flat amount – you will have to pay the government back 20% of your home’s value at that point. This is the case whether the value has risen or fallen.
You can repay the equity loan at any time before this though, without penalty, so long as it’s in chunks of at least 10% of your home’s current market value.
