Help to Buy Equity Loan Schemes: Old & New | Curtis Parkinson
Help to Buy Equity Loan Schemes - Old & New

Help to Buy Equity Loan Schemes: Old & New

The government’s Help to Buy Equity Loan scheme has offered a helping hand to many during the COVID-19 crisis. However, they may have stepped in back in July to help those in need by extending the build deadline, but it’s clear that a further extension of this scheme isn’t on the cards. Instead, the government’s new strategy – Help to Buy: Equity Loan (2021-2023) scheme, launched in November 2020, is taking centre stage.

Current Help to Buy Scheme Extension

Undoubtedly, the two-month extension has been a considerable relief to many home buyers who were worried that their purchases were about to fall through.

Designed to offset the pressure caused by the COVID-19 crisis, the 2-month extension gives builders until 28 February 2021 to finish construction. But the 31 March 2021 cut-off for purchases to complete remains the same.

Additional Help Until 31 May 2021

Housing Minister Christopher Pincher announced a further protective measure for those experiencing severe delays. Buyers with a reservation in place before 30 June can request assistance from Homes England. Subject to their approval, purchasers may be granted an extension until 31 May 2021 to legally complete their purchase.

New Help to Buy Equity Loan Scheme Launch

Announced recently by Homes England, the government’s new scheme, which will replace the current one, will run from 1 April 2021 through to March 2023. Applications opened in December 2020 and are only available to first-time buyers.

Since the Help to Buy equity loan scheme began in April 2013, 272,852 property sales have completed.

Similar to the current arrangement, the new Help to Buy Equity Loan (2021-2023) provides a low-interest loan towards a deposit. Apart from restricting loans to first-time buyers, the new scheme also introduces regional price limits. The caps sit at 1.5 times the average first-time buyer price for each region, in the hope that this will reduce the amount that buyers need to borrow. How much you can spend on your home will depend on where you buy a house.

Essentially, under the new scheme, first-time buyers can buy a new build property with a deposit of 5% of the purchase price. The government will lend up to 20% (40% in London) of the cost, leaving the first-time buyer to arrange a mortgage for the remaining balance. The government equity/top-up loan is interest-free for the first five years, with a small £1 monthly management fee.

Our Advice

If you need an idea of legal costs or further information or advice about the Help to Buy Equity Loan scheme, please contact us. We’re here to help.

Please note that all views, comments or opinions expressed are for information only and do not constitute and should not be interpreted as being comprehensive or as giving legal advice. No one should seek to rely or act upon, or refrain from acting upon, the views, comments or opinions expressed herein without first obtaining specialist, professional or independent advice. While every effort has been made to ensure accuracy, Curtis Parkinson cannot be held liable for any errors, omissions or inaccuracies.

Partnerships & Accreditations