Not everyone has the facility to save a large deposit for a new home. However with the addition of the government backed “Help to Buy” scheme, some qualifying borrowers now have the facility to apply for loans on new-build properties worth up to £600,000. Borrowers now only have to put down a minimum 5% deposit, they can then gain up to 20% with an equity loan from the “Home and Communities Agency“. The Homes and Communities Agency is the national housing and regeneration agency for England, with a capital investment budget of around £4bn for the period 2012-15.” Through “Help to Buy”, the government provides an equity loan through the Homes and Communities Agency of up to 20% of the property’s value.
This is an investment in you and your property by the government and at end of the mortgage or when you sell the property, you’ll have to repay your equity loan to them. This will be 20% of the value at the time of sale and there is no fee applied to the equity loan for the first 5 years. After the first 5 years an annual fee of 1.75% is payable to them and it rises by the “Retail Price Index” by 1% each year.
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