A quick guide to the Help to Buy Equity loan

27th May 2019

We have a host of new build properties available in our current residential sales portfolio, and aside from the added benefit of new build guarantees as mentioned in our last blog, many of these properties also have the added bonus of giving you a helping hand financially by qualifying for the government-funded Help to Buy Equity Loan. This scheme is fairly new, and not particularly well known or understood, so here’s a quick summary to help you learn a little more about the equity loan to see if it’s something you might benefit from when you’re looking to purchase your next home in Sussex.

The Help to Buy Equity Loan explained

The easiest way to think of the equity loan is that it will allow you to buy a new home and you will only need to find a deposit and mortgage for 80% of the value of the home. The other 20% will be funded by your Equity Loan. You do however need to have a deposit at least equivalent to the value of 5% of the entire purchase price of the property. So, for example, if you are buying a house worth £200,000 your deposit must be at least £10,000. Your equity loan of 20% would be £40,000, therefore your mortgage would be £150,000. You can put down more deposit if you like, meaning you need to borrow less. It’s likely that if you’re not a first-time buyer you already have some equity in the home you’re selling that can be used towards the purchase. The benefit of using the loan scheme is that by borrowing less money as a mortgage you will be able to find more economical mortgage rates, and could also afford a more expensive home. Better still, the 20% that you have borrowed is interest-free for the first five years. After that the interest rate is low, and there are various different ways to repay.

Making the most of the Equity Loan Interest-free period

The sooner you repay the equity loan, the cheaper it will be, because you will pay less interest but also the loan is attached to the value of the property. Because the loan is secured against 20% of the value of the home, the loan value will rise as the property value does. So if house prices continue to rise, it may be better to repay to the loan as soon as possible by remortgaging or staircasing (paying 10-25% off at a time) Be aware that there are fees associated with repayment, so be sure to include these in your long term budget before you decide whether you can comfortably afford your new home.

Oakley Residential Sales properties currently eligible for the Help to Buy Equity Loan

As of May 2019, we currently have 3 new homes sites that are available for purchase and eligible for the Help to Buy Equity Loan, and always have a healthy pipeline of new homes on the horizon.

Elizabeth Court, Burgess Hill, 2-bedroom apartments
Kemptown House, Brighton, 2 and 3-bedroom apartments
Pepper Close, Wivelsfield, West Sussex, 3 and 4-bedroom detached and semi-detached houses

If you are interested in any of these properties above or would like to be made aware of new and upcoming properties in the area that are eligible for the Help to Buy equity loan, please call 01273 688881 and we’ll be happy to help. If you view our properties and are interested in making an offer, we can put you in touch with Help to Buy advisors to discuss your finances before you commit to make sure you’re fully aware of how the scheme will work for you in the short and long term.


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