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FAQs About Residential Conveyancing: What is the Help to Buy Equity Loan and am I eligible?



In the third mini blog in this series of FAQs about Residential Conveyancing, Debra Morley, Associate Chartered Legal Executive in our Wells office, answers questions about the Help to Buy Equity Loan.

What is it?

The Help to Buy Equity Loan is a Government scheme which helps first time buyers and existing homeowners buy newly built homes by offering an equity loan in addition to your mortgage.

 How much will I need?

  • You will obtain a mortgage for 75% of the purchase price
  • The Government will provide a Help to Buy Equity Loan of 20% (or up to 40% if you are buying a property in London)
  • You will need your own savings of the remaining 5%

EXAMPLE: If you are buying a new home for £250,000 this will be made up of:-

Mortgage – approx. £187,500

Help to Buy loan – approx. £50,000

Savings – approx. £12,500

When do I pay the money back?

  • You start paying your mortgage back from the day of completion
  • You will not start paying your Help to Buy loan back for the first five years of completion

Am I eligible?

  • The property must be a newly built home
  • You can be a first time buyer or an existing homeowner
  • The purchase price must be no higher than £600,000
  • You must live in the property and cannot rent it out
  • You must not own any other property at the time of completion

How long will the Scheme be available?

The latest information available from the Government’s Help to Buy website advises that the Scheme will be running until March 2021.

The Government has announced that a new scheme will start in April 2021 until March 2023 which will be restricted to first time buyers and will include regional property price caps to ensure the scheme reaches people who need it most.

Help to Buy ISA

If you are a first time buyer you may also wish to consider saving money into a Help to Buy ISA as the Government will boost your savings by 25%.

EXAMPLE: For every £200 you save, the Government will contribute a bonus of £50 up to a maximum bonus of £3,000.

Am I eligible?

  • You must be a first time buyer
  • The purchase price must be no higher than £250,000 (or £450,000 in London)
  • The property can be a pre-owned property or a new build
  • You must live in the property and cannot rent it out
  • You must buy the property with a mortgage

How much bonus will I get?

The minimum government bonus is £400, meaning that you need to have saved at least £1,600 into your Help to Buy ISA before the bonus can be claimed.  You cannot use the bonus for anything except the purchase of a new home and cannot claim this bonus yourself – your solicitor will do this on your behalf.  You cannot use your bonus to pay your deposit and it can only be claimed on completion.

How long will the Help to Buy ISA be available?

You can open a Help to Buy ISA until 30 November 2019, after which new savers will not be able to open a new account.  Existing account holders can keep saving into their account until 30 November 2029 when accounts will close to additional contributions.  You must claim your bonus by 1 December 2030.

At Mogers Drewett our team of residential conveyancing specialists help in all different types of conveyancing transactions, including acting for clients buying a new home using the Government’s Help to Buy Scheme and clients that wish to claim the bonus from their Help to Buy ISA.  No question will ever be a silly question – if you have any queries or want to discuss your options please contact us on 01225 750000 (Bath), 01749 342323 (Wells) or 01935 813691 (Sherborne).