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06 | 01 | 20

Dispelling the Myths on the Help to Buy: Equity Loan Scheme

Help to Buy (HTB): Equity Loan is a government scheme designed to help people get on or move up the property ladder by offering assistance with the deposit and therefore mortgage payment. The loan is available for homes across the UK, and we at FABRICA have several HTB homes, including the new Wyndham Studios apartments in Camberwell, launching in Spring 2020.
Camberwell Green
Contrary to what you might think, there are a range of options when it comes to HTB homes, and applying for a loan is a relatively straightforward process. Here we separate fact from fiction when it comes to the HTB scheme.

It’s too complicated

Not at all. The Help to Buy scheme is an equity loan provided by the UK government, and is designed to make life easier, not harder, for those wishing to own a new home. It’s pretty straightforward: the government lends you up 20% of the cost of your home and you will need a minimum 5% deposit and a 75% mortgage to make up the rest. For London homes, the loan increases to up to 40%, meaning you’ll need a 5% deposit and a 55% mortgage. Also, we are here to guide you every step of the way when buying a FABRICA home via the HTB scheme.

I want a beautiful home in a great location, so I don’t think an HTB home is for me

You don’t need to compromise on what you want in a home. HTB homes are modern new builds, and at FABRICA, we only represent the best design-led homes in favourable locations. There’s a range of options available to you - from stylish studio flats to 4-bedroom rural homes, and for a range of budgets too. The maximum price tag is £600k, so there’s plenty of choice. Take a look at Wyndham Studios in London’s creative Camberwell neighbourhood for an example of beautiful new design-led homes available on the scheme.

The interest will be high

You won’t be charged any interest on the 20% loan (or 40% London loan) for the first five years of owning your HTB home. However a management fee of £1 a month will be applicable from the date of purchase. As of year six, a fee of 1.75% is payable on the equity loan, which rises annually by RPI (Retail Price Index) inflation plus 1%.

I’m not a first time buyer so I’m not eligible anyway…

Wrong! You don’t have to be a first time buyer to qualify for the HTB scheme, but the new home must be your only residence, which means you can’t own any other home in the UK or abroad. If you want to buy a second home while owning your HTB home, you must repay the Help to Buy equity loan off first. It’s also worth noting that married couples by law own each other’s assets, therefore all assets in a single name are treated as jointly owned for this scheme.

There’s a deadline to pay back the loan

Correct, but you have 25 years to do so – or before if you sell the home or the mortgage is redeemed.

I can't sublet my HTB home

That’s right. HTB is specifically designed to help people move on to or up the housing ladder, so if you want to rent out your home, you will need to repay the equity loan first.

I can extend the home as much as I want to

It depends. In most cases, you’ll be asked to repay part or all of the loan before making plans for improvements or alterations, but exceptions do apply, for example modifications for a disability. When you come to sell your property, if improvements have been made with the approval of Homes England’s Mortgage Administrator, these will be ignored when your property is valued to work out how much should be repaid to Homes England. You can find out more about the Mortgage Administrator here: www.myfirsthome.org.uk.

If anything breaks, I’ll have to fix it

Yes, it’s your home so you’ll be responsible for repairs and maintenance. As HTB homes are new builds, they come with a guarantee that will cover certain defects associated with house builder’s workmanship for up to 10 years after being built.

There won’t be many banks that will help me with an HTB mortgage...

You don’t need to worry. Lots of major banks are on board with the HTB scheme. For example, here are just some of the banks offering London Help to Buy: Aldermore, Bank of Scotland, Barclays, Halifax, Leeds, Lloyds, Nationwide, NatWest, Royal Bank of Scotland, Santander, Teachers and TSB.

For more information about the new studio, 1-, 2- and 3-bedroom apartments at Wyndham Studios, please get in touch with one of our sales team by calling 0800 783 2159 or by completing an enquiry form