The Help to Buy scheme is set up by Homes England to help first time buyers get on the property ladder.
It is available on Newly built properties and the builder will have registered with Help to Buy.
You need a minimum deposit of 5% and the Equity Loan from the government provides a loan of up to 20% of the property value (40% if you are in London).
A repayment mortgage is then taken for the remaining balance which needs to be a minimum of 25% of the property value.
The Equity loan is interest free for 5 years, you just pay £1 per month admin fee to keep the account open. From year 6 you start paying a monthly interest fee at 1.75% of the equity loan. This will rise every April by Retail Price Index (RPI) plus 1% until the loan is repaid. This payment is just the interest and does not repay the loan.
The Equity loan will need to be paid off by the end of the term, when you sell your home or if you pay off your mortgage. You can repay the equity loan at any time in full or at a minimum of 10% of the property value at a time. People often chose to do this through saving, inheritance or by looking to add this into their mortgage subject to affordability.
The equity loan stays as a % of the property value, so if the property value goes up or down the loan will mirror this.
The equity loan was previously available for first time buyers and home movers, however from April 2021 it will only be available to First Time Buyers (to qualify as a first time buyer you must not have own or have owned a residential property or land which a house could be built on anywhere in the world).
The second large change is that there is now a price cap on the maximum value of the property you can purchase using the Help to Buy Scheme based on the area of the country you are purchasing in.