Help To Buy Equity Loans have been a huge success over the last few years, and the government has announced an extension for the Help To Buy scheme for 2021-2023. Find out what the 2021 changes, new price caps, and deposit requirements are for the new Help To Buy Scheme 2021.
A Recap: What is the Help To Buy Scheme?
Help To Buy is a government scheme that allows you to buy new build property with only a 5% deposit. The government will lend you another 20% of the property value (the Equity Loan), so you can use that in combination of your 5% to form a 25% deposit for a mortgage. Londoners were allowed to borrow more than 20%. More details on the existing pre-2021 Help To Buy scheme here.
What are the key changes to the Help To Buy Scheme 2021?
There are several key fundamental changes to the Help To Buy Loan Scheme starting from 1st April 2021.
Key 2021 Help To Buy Changes:
– Only available to First Time Buyers
– Regional price caps
– Help To Buy 2021 applications accepted starting 16th December 2020
Fundamentally, most of the Help To Buy scheme details are not changing, and will remain the same, as detailed below.
Other features of the Help To Buy Scheme remains the same, including:
- Londoners can get an Equity Loan for 35% of the property value, instead of 20% for the rest of England
- No interest charged from the government for the first 5 years of the Equity Loan (you still have to pay your mortgage borrowing interest though)
- The amount you repay back on the Equity Loan is based on the value of the property when you pay back, not your original amount you borrowed
- You must take a repayment mortgage
- There is a small £1 management fee charged as long as you still have an Equity Loan outstanding
- Only new-build flats or houses are eligible for the Help To Buy Equity Loan scheme
- You cannot sublet or rent out your home. However, you can still take on lodgers.
Is the Help To Buy Scheme only available for First Time Buyers?
Yes – from the 1st April 2021, the Help To Buy Scheme is only available for First Time Buyers. Previously, it was open to all homebuyers who met the criteria.
The rules have been tightened to ensure that Help To Buy helps those who needs it most – First Time Buyers who are struggling to raise enough mortgage deposit for their first home purchase. This First Time Buyer rule for Help To Buy will be in place for the 2021-2023 Help To Buy scheme.
What are the Price Cap changes for Help To Buy in 2021?
Previously, there was a flat price cap of £600,000 and below for all Help To Buy purchases. However, from April 2021, there will be different price caps for each of the below regions in England. As you can see, the price caps have been severely reduced for many regions, but should still be high enough for most First Time Buyer purchasers. For London, the price cap has not changed and still remains at £600,000.
See table below for the new 2021 Help To Buy price caps for regions in England.
In Wales, the price cap will reduce from £300,000 to £250,000.
In Scotland, the new price cap for April 2021 onwards has not been announced yet. Up until then, the price cap is £200,000.
|English Region||New Price Cap (2021)||Old Price Cap (Pre-2021)|
|Yorkshire & The Humber||£228,100||£600,000|
|East of England||£407,400||£600,000|
When can I apply for the new 2021 Help To Buy Equity Loans?
Applications are accepted from the 16th December 2021. To apply, find your local Help To Buy Agent for your region. There are three Help To Buy agents for England.
If you’re looking to apply for an Equity Loan based on the previous Help To Buy scheme, please ensure you get your application in before the 16th December 2021 as no new applications will be accepted after that date for the old scheme.
The full guidance for England from the government is available here. This guide gives you all the information you need to know about the new Help To Buy Equity Loan scheme for 2021 to 2023.