Help to Buy

What is a Help to Buy: Equity Loan?

  • Help to Buy: Equity Loan is a loan from the government that you put towards the cost of buying a newly built home – its aim is to help first-time buyers to get on the property ladder.
  • If you’re eligible for an equity loan, you can borrow up to 20% (40% if you’re in London) of the market value of a new home and you only pay interest on the amount you borrowed. You should be aware that the interest payments you make do not go towards repaying your equity loan but you can choose to repay it all, or in part, at any time.
  • If you sell your home, you will need to repay all of your equity loan.
  • You can only apply for Help to Buy if you reserve your new home with a help to buy registered homebuilder.


Key things you should know:

  • Help to Buy: Equity Loan is not a discount scheme or a price reduction - the purchase price of your new home will be the same whether you buy with or without an equity loan.
  • The equity loan is not interest free – interest is not charged for the first 5 years of the equity loan, but you will begin to pay it from year 6.
  • The total equity loan amount you repay is linked to the value of your home at the point of repayment, not the amount you originally borrowed.
  • You cannot have an equity loan without a repayment mortgage, which is valid for the duration of the equity loan.
  • You may pay back more than you borrow as the percentage you borrow is based on the market value of your new home when you buy it.
  • When you repay your loan in full or in part, the amount you pay back is worked out as a percentage of the market value at the time you choose to repay - if the market value of your home rises, so does the amount you owe on your equity loan and if the value of your home falls, the amount you owe on your equity loan falls too.

Help to Buy Calculator

Discover what you can afford!

How does it work?

  • With an equity loan, you borrow a minimum of 5% and up to 20% (or up to 40% in London) of the market value of your newly built home, the amount you can spend on your new home depends on where in England you buy it - the South East England price cap is £437,600.
  • You must pay a deposit of 5% of the purchase price of your new home at exchange of contracts and arrange a repayment mortgage of at least 25% of the purchase price. The equity loan is secured against your property in the same way a repayment mortgage is.
  • You must repay the equity loan when you pay off your repayment mortgage, sell your home or reach the end of your loan term (normally 25 years) but you can pay it off, in full, any time before then.
  • Your first part repayment will need to be at least 10% of what your home is worth at that time.

Homebuyer Diagram


For the first 5 years:

  • the equity loan is interest free
  • pay a £1 monthly management fee by Direct Debit.

From year 6:

  • pay the £1 monthly management fee
  • pay a monthly interest fee of 1.75% of the equity loan
  • interest fees will rise each year in April by the Consumer Price Index (CPI), plus 2%
  • continue to pay interest until you repay your loan in full.


Am I eligible?

  • To be eligible for Help to Buy: Equity Loan 2021- 2023 you must be a first-time buyer, you and anyone you’re buying with must not already own a home (or residential land) now or in the past, in the UK or abroad
  • All applications made by anyone that is married or in a civil partnership will have to be a joint application with their spouse or civil partner.
  • You will need to sign a legal declaration to confirm that you are a first-time buyers.
  • Getting independent financial advice will help you assess if the Help to Buy equity loan is right for you.

Frequently Asked Questions

Which Ashgrove Homes developments are available with Help to Buy?
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How long does the Help to Buy: Equity Loan scheme last?
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Where can I get free help and advice?
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