21 September 2018
We put together some of your most frequently asked questions about the Help to Buy equity loan and asked the official Help to Buy North East, Yorkshire and Humberside assistant manager Ben Wilkinson for the answers!
So first of all, what is the Help to Buy equity loan?
The Help to Buy Equity Loan is a government backed scheme that helps both first time buyers and existing homeowners buy a new build property. The scheme allows you to take out an equity loan of up to 20% of the Full Purchase Price which is interest free for the first 5 years.
You can put in a 5% deposit, take a mortgage out for up to 75% then the remaining amount of 20% will come from the equity loan subject to you being eligible. The maximum purchase price for Help to buy is £600,000 and must be your only residence.
How would someone apply for Help to Buy?
The first step is to find a property that is offering Help to Buy. Once you have found your perfect home you will need to put down a reservation fee of up to £500. The next step is to fill out a Help to Buy application form* and send this across signed along with a copy of your reservation form. You will then be assessed by your local Help to buy agent and receive a decision within 4 working days.
* The Help to Buy application form can be found here - https://www.helptobuyneyh.co.uk/apply/
If someone wanted to, could they put down more than a 5% deposit?
Yes, a buyer can put in more than a 5% deposit when using Help to Buy meaning they can take less out as a mortgage or a smaller equity loan. The only guideline around this is that a buyer has to take out at least 25% of the Full Purchase Price as a mortgage.
Can someone still apply for Help to Buy if they have had poor credit in the past?
Yes, it all depends on whether you are able to take out a mortgage with a lender. The Help to Buy Agent doesn’t do any credit checks just an affordability check on your current situation. All the credit checks will be done with the mortgage lender.
If someone is declined for Help to Buy, would they lose their reservation fee?
If an applicant applies for Help to Buy and is declined then they will be eligible to get back the full reservation fee that they put down on the property. This is part of the house builder’s contract with the Homes and Communities Agency.