What is a Help to Buy equity loan?
A government loan scheme that provided up to 20% of the purchase price on new build homes, letting buyers purchase with a smaller deposit; the scheme closed to new applications in England in April 2023.
Help to Buy equity loans were a government lending scheme designed to help buyers purchase newly built properties across England. Under the scheme, the government would lend up to 20% of the property's purchase price interest-free for the first five years. Buyers needed a mortgage for 75% of the price and were required to provide at least a 5% deposit themselves, meaning the government loan bridged the gap between deposit and mortgage.
The scheme applied only to new build homes and was intended to help first-time buyers and other purchasers access the new homes market without saving for a larger deposit. The government's equity share meant that when the property was eventually sold, the government received its percentage of the proceeds.
Help to Buy equity loans closed to new applications in England on 31 March 2023, though the government continued to support existing scheme participants. The scheme's closure reflected a policy shift in how government support for housing has been directed. Buyers and agents in Birmingham should be aware that this product is no longer available for new purchases, though existing equity loan holders may still have outstanding arrangements. Estate agents involved in new homes sales in the region will have guided clients through this scheme before closure, and some buyers may still hold active equity loans from earlier purchases.