Help to Buy: Equity Loan Scheme

Equity loans are open to both first-time buyers and home movers on new-build homes in England with a purchase price up to £600,000. You won’t be able to sub-let your home if you use this scheme. It must also be your only property.

How it works

With an equity loan:

  • you’ll need to contribute at least 5% of the property price as a deposit the government will give you a loan for up to 20% of the price
  • you’ll need a mortgage of up to 75% to cover the rest


For a property worth £200,000 Amount


Cash deposit £10,000 5%
Equity loan £40,000 20%
Your mortgage £150,000 75%

Equity loan fees
You won’t be charged loan fees for the first 5 years of owning your home. In the sixth year, you’ll be charged a fee of 1.75% of the loan’s value. After this, the fee will increase every year. The increase is worked out by using the Retail Prices Index plus 1%.

Your Help to Buy agent will contact you before the fees start, to set up monthly payments with your bank. You’ll also be sent a statement about your loan each year. Fees don’t count towards paying back the equity loan.

Applying for an equity loan
Contact the Help to Buy agent in the area where you want to live if you’d like to buy a home with an equity loan. At Hereford Pension, Investment & Mortgage Centre LLP we can arrange this on your behalf. You must buy your home from a builder who has registered as a Help to Buy builder.

Selling your home and paying back the loan
You must pay back the loan after 25 years or when you sell your home - whichever is earliest. How much you pay back will depend on the market value at that time. You can pay back part or your entire loan at any time. The minimum percentage you can pay back is 10% of the market value of your home. The amount you pay will depend on the market value at that time.