Help To Buy: Equity Loan Scheme A Success

According to the Home Builders Federation (HBF), the Government’s Help to Buy: Equity Loan scheme would appear to be proving a success and getting more first time buyers on the housing ladder. It is quite possible that some of those purchasers may not have been able to afford to buy their homes without such support. Property developers will no doubt have welcomed the introduction of the scheme as it will have helped them sell more properties and hopefully liquidate their development finance quicker.

The Help to Buy:Equity Loan scheme provides up to 20% of the purchase price of a property (40% in London). So, if we look at a property that costs say £250,000 then the purchaser will be expected to find 5% of the purchase price as a cash deposit that is £12,500. They will try to arrange a residential mortgage through a traditional lender such as a bank or building society for 75% of the purchase price that is £187,500. The Help to Buy: Equity Loan scheme will provide £50,000. The borrower will not have to pay any interest on the £50,000 for 5 years.

Should the borrower sell their property for let us say £300,000 he or she (or they) would receive £225, 000 plus their deposit of £15,000 back making a total of £240,000 that would be used towards clearing their mortgage of £187,500. The Government would receive £60,000.

From April 2013 to March 2018, there have been 170,000 homes bought utilising the scheme. Interestingly, 81% of the borrowers were first time buyers. Apparently, around 246,000 people have used the scheme to buy a property. Last year, there were 48,000 homes that were sold via the Help to Buy: Equity Loan scheme.

If you are a property developer who is looking to finance their next building project whether it is to build one new home or an estate with 50 properties on it then why not make contact with us here at Commercial Mortgage Link. We will then put you in touch with a specialist broker who can discuss your development finance requirements to help fund the project.

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