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Changes to the Help to Buy Equity Loan and how the scheme can work for you

28 January 2021

Taking that first step onto the property ladder is exciting but can be daunting. There’s so much to think about from ensuring you have a deposit saved to deciding which mortgage lender to go with. Schemes such as the Government’s Help to Buy Equity Loan have been designed to take some of that pressure away, giving you an extra helping hand when looking for new build homes for sale in Devon. This year, changes to the Help to Buy Equity Loan scheme will take place and it’s important you know what these changes are so that you can determine if you are still eligible to use it.

So, what is the Help to Buy Equity Loan scheme and what are the changes to Help to Buy in 2021? Continue reading this blog to find out more.

What is the Help to Buy Equity Loan?

Launched in 2013, the Help to Buy Equity Loan scheme was introduced by the Government to help first time buyers get onto the property ladder. Originally available to existing homeowners too, the scheme was described as “the biggest Government intervention in the housing market since the Right to Buy scheme” of the 1980s.

So how does the Help to Buy Equity Loan scheme work? Applicable on new build homes only, the scheme allows the buyer to reserve a property with just a 5% deposit. The Government contributes up to 20% of the property value in the form of a loan and the buyer will secure a mortgage for the remaining 75%. The loan is interest free for the first five years but can only be used on homes under a certain price cap which now differs from region to region.

How has the Help to Buy Equity Loan scheme changed?

This year, the Government has introduced some changes to the Help to Buy Equity Loan scheme that you need to be aware of. These new rules will run from April 2021 – 2023:

  • You must be a first time buyer – the old scheme allowed both first time buyers and existing homeowners to apply for it but now, it is only available to first time buyers looking to reserve a new build home. All parties purchasing the home must be first time buyers e.g. if you are looking to reserve a new build home with your partner using the scheme, both of you must meet the definition of a first time buyer. This means that you must not have owned a home or residential land in the past in the UK or abroad, and not have had any form of sharia mortgage finance.
  • There are regional price caps – buyers looking to use the Help to Buy Equity Loan scheme to reserve a new build property must ensure that the property falls under the new regional price caps. In the South West, this has been set at £349,000.

The rules that continue to remain the same as the previous scheme are:

  • Your mortgage must be capital repayment – if you are hoping to use the Help to Buy Equity Loan scheme, you must secure a capital repayment mortgage and not an interest only mortgage. This means that you will pay both the interest on your mortgage and part of the loan itself every month as opposed to only paying off the interest.
  • Not available on buy-to-let properties – you must be looking to purchase the new build home to live in yourself and not purchase as a buy-to-let property.

Which Devonshire Homes properties can I reserve using the Help to Buy Equity Loan?

Now you understand how the Help to Buy Equity Loan scheme could work for you, why not find out more about the different house styles we have available which you can reserve using the scheme? Here are just some of the house styles that we currently have available under the South West’s price cap:

Longston Cross, Bovey Tracey – The three bedroom Hartland is available from £289,950 and would make the perfect home for a first time buyer. This house style enjoys an open plan living / dining area, a single garage and allocated parking.

Tarka View, Crediton – If a townhouse is more your style, the three bedroom Copplestone at our popular Crediton site is available from £265,000. With flexible living across three floors, you will enjoy a 20 ft long garage with light and power, an abundance of storage space and three good-sized bedrooms.

Gwallon Keas, St. Austell – Looking to use the Help to Buy Equity Loan scheme to purchase a new home close to the coast? The three bedroom Par house style is available at Gwallon Keas from £294,950 and features a unique split-level design with a spacious living room on the lower ground floor.

Applegate Park, Kingsbridge – Our latest new homes site also has a couple of properties available which fall under the Help to Buy Equity Loan price cap. The Dartington house style is a beautiful three bedroom property which starts from £344,000.

We hope you have found this introduction to the scheme and the impending changes useful and please, if you have any questions about how the Help to Buy Equity Loan scheme works, do contact our Sales Executives at any of our sites. They will be able to give you more information and explain how the scheme could work for you.

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