Changes in help to buy equity loan scheme | AAG Wealth Management

Changes in help to buy equity loan scheme

Posted: April 20, 2020

As there a lot of new build developments, it is vital to know about the changes in help to buy equity loan scheme.

Firstly, with a help to buy equity loan the government lends you up to 20% (40% if in London) of the purchase price, the buyer will only need a deposit of 5%.  This means that the buyer will only require a mortgage 75% (55% if in London).  For example, assuming a purchase price of £200,000, the government’s loan would be £40,000 (20%), the buyer’s deposit would be £10,000 (5%) and the mortgage required would be £150,000 (75%).

Whilst the help to buy Equity loan scheme does not expire until 31st March 2023, from 01/04/2021 to 31/03/2023 there will be some significant changes.

Currently the scheme is available to first time buyers and homeowners looking to move and the purchase price is capped at £600,000 (regardless of where they are buying)

From 1st April 2021 to 31st March 2023

  • The scheme will only be available to first time buyers, defined as those who have never previously owned or purchased a property.
  • The scheme will also introduce regional property price caps.  As you can see from the table below all price caps (apart from London) has significantly reduced.
Region Price cap for properties eligible for Help to Buy Equity Loan scheme from April 2021 to March 2023
North East £186,100
North West £224,400
Yorkshire and The Humber £228,100
East Midlands £261,900
West Midlands £255,600
East of England £407,400
London £600,000
South East £437,600
South West £349,000

Until the new scheme is introduced customers will continue to be able to purchase homes through the current Help to Buy scheme unaffected.  However, all homes purchased under the current scheme will need to reach legal completion by 31 March 2021.

As developments can sometimes take over 1 year to complete, it is important that clients are aware of the changes before reserving a plot.  Especially important for non-first- time buyers and clients reserving plots outside of London.

Your home may be repossessed if you do not keep up repayments on your mortgage.

If you’d like to speak to a member of the AAG in-house mortgage team, we’d be delighted to talk to you. Click the button below to book a complimentary one-to-one via video or telephone.