The Help to Buy equity loan (in England) is available to those looking to purchase a new-build property, and able to put down a 5% deposit. As we’ve briefly outlined, the government will lend you a further 20% deposit on top of this on an interest-free basis for the first five years (after this, interest is set at 1.75%, increasing on a yearly basis by the rate of inflation). This loan, combined with your initial deposit payment means you’ll only need to apply for, at most, a mortgage covering 75% of the property price –  offering drastically reduced mortgage payments in comparison to buying independently with a small deposit.

The help to buy equity loan is an integral part of the help to buy scheme, provided by the UK government to qualifying applicants. This loan is most often used to provide a 20% deposit ‘top-up’ to buyers purchasing new builds priced at under £600,000 in England. The Help to Buy equity loan is offered on an interest-free basis for the first five years (after this, interest is set at 1.75%, increasing on a yearly basis by the rate of inflation). 

The structure of this equity loan alone makes the Help to Buy scheme ‘worth it’ for a huge number of qualifying home buyers, with the initial lack of interest providing a unique offering of financial breathing space, and the large deposit allowing for significantly lower interest rates than those seen on properties purchased with smaller deposits. 

Of course, there are restraints to the scheme, notably its restriction to the purchase of new-build homes only – meaning it’s not necessarily for everyone.