How Help to Buy can get you on the property ladder with a £5,500 deposit

Published: June 2017

Do you dream of owning your own home? Want a place you can paint and hang pictures on the wall without fear of losing your deposit? The Help to Buy Equity Loan could be the answer you’ve been looking for, and you could buy your very own brand new home with a £5,500 deposit.

With the Government Help to Buy Equity Loan you can buy a brand new home with just a 5% deposit, you then borrow up to 20% of the properties value as an Equity Loan and then mortgage the remaining 75%. See below for some examples of how it works and compare it to purchasing on the open market.

Example 1

Full Value of a one bedroom apartment = £110,000

5% deposit required (minimum) = £5,500

20% equity loan borrowed = £22,000

75% mortgage required from high street lender = £82,500

If you bought this home on the open market with a 20% deposit you’d need £22,000

Example 2

Full Value of a three bedroom house = £250,000

5% deposit required (minimum) = £12,500

20% equity loan borrowed = £50,000

75% mortgage required from high street lender = £187,500

If you bought this home on the open market with a 20% deposit you’d need £50,000

What homes are available to buy?

Homes available to purchase using the scheme are new builds and are available to buy from developers. More information can be found here.

What about the loan?

The Equity Loan is interest free* and payment free for the first 5 years meaning all you pay for the first 5 years of home ownership is your monthly mortgage payments. You can keep the loan running for up to 25 years, or as long as your mortgage term but in the sixth year of ownership you would start to pay interest on the loan on a monthly basis. To read further information on the interest payments and how to pay back the loan please refer to our full guide on our website.

How do I find a home on the scheme?
Visit our website for property listings and remember to check out the developers individual websites too. You can buy a home by visiting the developers sales and marketing suites and you can often reserve your new home off-plan (before it’s finished) and move in when it’s ready.

More Information

To read more information on the scheme download our guide.

* The equity loan is interest free for the first five years, but in the 6th year of ownership, a fee of 1.75% of the equity loan based on the market value at the time you purchased is payable monthly, rising annually by the increase (if any) in the Retail Price Index (RPI) plus 1%. This is applicable if you have not paid back your equity loan by the end of year 5. An illustration will be given to you at the time of purchase. You must pay a monthly management fee of £1 per month from the start of the loan until it is repaid.