Help to Buy equity loan (Ulitmate guide)

To get a help to buy equity loan you will first need to ensure you meet the eligibility requirements based on what country you are applying from. If you are applying from England then the property will need to be valued at no more than £600,000 and you will need to be a UK resident, not own another property and have at least a 5% mortgage deposit.
If you meet these requirements you can then apply to your loan help to buy agent. They will ask you to fill in a help to buy property information form and a first-time buyer declaration which states that you do not own any other property in the world. If you pass all the checks they will let you know that you are eligible for the help to buy equity loan and give you an authority to proceed letter or similar.

Yes, you can remortgage to pay off the help to buy equity loan but you can either make a partial repayment of the help to buy equity loan or a fill repayment. The minimum you can repay of the help to buy equity loan is 10%.  Remortgaging to pay off the help to buy equity loan is the route most borrowers will take but you should remember that as help to buy equity loans can only be used on new build properties and new build properties are usually sold at a price which is usually 15% higher than the properties market value, you will almost certainly face issues when the time comes to remortgage as you may have negative equity.
Negative equity is when the mortgage on your property is higher than the property value. This means you have no equity in the property and you are unable to remortgage and pay off your help to buy equity loan

Yes, you can use your help to buy ISA with an equity loan but you will need to meet the eligibility requirements of both of these government schemes.

The interest rate on help to buy equity loan is 0% for the first five years, after which the interest rate is  1.75% on the outstanding loan. The interest rate on the help to buy equity loan will then increase each year by RPI + 1%.

Due to the rising house prices in London, the Government decided to increase the loan amount it gives prospective buyers in London from 20% to 40%. This kicked in back in February 2016 but not so many people are yet aware of it.

Well no, the Help to Buy equity loan scheme is pretty much the same apart from the loan limit being raised from 20% of the property price to 40% of the property price. If you have 5% of your mortgage deposit the Government will give you up to 40% of the property value as an interest-free loan for 5 years.
There is no interest charged on the loan for the first five years but after which you begin to pay just the interest charge of 1.75%. This then rises each year by the retail prices index (RPI) inflation measure + one percentage point. Assuming RPI is 4%, the interest rate would rise by 5% (4% + 1%).

The government’s Help To Buy equity loan scheme seemed like a welcome help for those first time home buyers struggling to save for that ever-elusive deposit, save 5% and the government will lend you up to 40% towards your deposit in London and 20% in the rest of England & Wales by way of an equity loan.
You get 5 years of no interest or having to make payments then in year 5 you start to get charged interest and need to start thinking about repaying the Help To Buy equity loan which if the property is increasing in value will also increase the amount you have to repay back to the Government(in property value).
The Help to Buy equity loan scheme is only available on new Build homes for first time buyers or new build homes for those already first time buyers who want to move up the property ladder.

The Help to Buy equity loan is fine if you don’t want to move into an older property where you could negotiate a better purchase price or an older property that you could add value to by way of installing a new kitchen or bathroom.

No, the help to buy equity loan scheme was designed to get housebuilders building, following the 2008/2009 financial crisis when banks stopped lending money to most potential homebuyers and insisting that those that meet their very strict criteria had much larger mortgage deposits such as 25%.
The high LTV (loan to value) mortgages vanished and this stopped developers from building. Could we blame them? why would developers build properties if banks were not going to give home buyers mortgages to buy the properties?
When using the Help To Buy equity loan scheme your ability to negotiate the purchase price is slightly removed and you may have to pay the price which is set by the developer as there will be other potential first-time buyers who want to purchase the same properties.