Help To Buy Equity Loans: What you need to know before the scheme ends for good

Since 2013, UK home buyers have been able to access loan assistance thanks to the government’s Help To Buy Equity Loans scheme. During the housing crisis and tough economic times, it has made property ownership a reality for many young people who otherwise would never have been able to afford it. 

However, in 2018, the government announced that the scheme would end in March 2023 – for good. While this means critical deadlines are looming, Choice Mortgages are here to help you navigate the process to ensure you can still benefit from the scheme. 

How does Help To Buy work?

In order to qualify for a Help to Buy equity loan, the property must be a new build sold by a registered Help to Buy developer, and, importantly, it only applies to first-time buyers. Property price limits are in place, and these vary by region. 

The initial requirement from you is to pay a deposit of at least 5% of the property purchase price, with you being able to borrow up to 20% by way of an equity loan. The remaining amount is funded by way of a mortgage.

There is no interest on the equity loan for the first 5 years, but once it kicks in – you will be charged a rate of 1.75% in the sixth year, which increases at each anniversary

Key dates to note

While this is the final season of the Help to Buy scheme, applications are still open for prospective first-time home buyers. These are the important dates to bear in mind and plan around:

Equity loan applications deadline: 31 October 2022 

Practical completion deadline: 31 December 2022. Note that this means the home builder should have completed work on your property such that it is ready to move into, with the new-home warranty in place. 

Scheme end date: 31 March 2023. By this time, you should have completed all the outstanding legal requirements for purchasing your home, and received the keys. It is your responsibility to make sure this happens, and funds will be withheld should you not meet this criteria. This date, however, has no bearing on your loan – your repayments will continue for the term of your loan.  

What to do if you’re in the process of building your home

Since the Help to Buy scheme only applies to properties sold by registered Help to Buy homebuilders, they should be aware of the key dates mentioned above. In fact, they communicate directly with the scheme with regards to which homes will meet the 31 March 2023 legal completion date, so it is highly unlikely that these deadlines will be missed.

Despite this, it is important to maintain full transparency and open communication with your homebuilder to ensure that your deadlines are met. 

Should you find yourself in a position where your homebuilder is unable to complete all the requirements on time, you’re eligible to receive your reservation fee and any deposits in full. 

We are here to help

If you are relying on the assistance of a Help to Buy: Equity Loan in order to make your dream first home a reality, the pressure is on to make it happen faster than you may have planned. 

It’s easy to be overwhelmed when faced with such a major life event, but you don’t have to go at it on your own. Choice Mortgages is proud to have supported many clients with the Help to Buy scheme. Our years of experience in the industry will ensure you achieve the dream of owning your first home.

We're here to help

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