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Help to Buy

 
 

A Helping Hand

Help to Buy is a government-backed equity loan scheme from the Homes and Communities Agency (HCA) for home buyers of new build properties.

The scheme aims to help buyers to purchase a new build home up to the value of £600,000. The HCA was set up to contribute to economic growth by helping communities to realise their aspirations for prosperity and to deliver high-quality affordable housing.

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Who Is Eligible?

The scheme is designed to help not only first-time buyers to purchase their first home, but also to support existing homeowners looking to upsize to a new property.

Help to Buy is only available on new build homes.

Help to Buy is available on Duchy Homes properties in England with a selling price of up to £600,000.

Buyers must have a deposit of at least 5% and must take out a repayment mortgage of between 25% and 75% of the full purchase price.

You are not permitted to buy a Help to Buy property with an interest-only mortgage.

If you could reasonably afford more than 90% of the full purchase price, you will not be eligible to receive Help to Buy assistance.

The property purchased must be your only residence and you must not own any other property.

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How Does It Work?

With Help to Buy you buy a new home on a new development with assistance from the HCA in the form of an equity loan.

You must take out a repayment mortgage on which you make repayments in the normal way. This mortgage, together with any cash contribution for a house deposit from you, must be a minimum of 80% of the full purchase price. The maximum full purchase price is £600,000.

The HCA will provide an equity loan to fund the balance needed to make up the full purchase price of your home, up to a maximum of 20% of the full purchase price.

You will be the legal owner with 100% title to your home.

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How Do I Repay?

The equity loan must be repaid after 25 years, or earlier if you sell your home.

Upon sale of your home, you must repay the Help to Buy contribution from a share of the sale proceeds. The amount you must repay is the same percentage of the proceeds of the sale as the initial equity loan from the HCA (i.e. if you received an equity loan for 20% of the purchase price of your home, upon sale of the home you must repay 20% of the sale price).

The equity loan is interest-free for the first five years, meaning that you will not need to repay any amount of the HCA contribution for the first five years. After that, you will pay a monthly or annual fee of 1.75%, rising annually by the increase (if any) in the Retail Price Index (RPI) plus 1%. The Post Sales HomeBuy Agent will collect your fee by direct debit or standing order. They will contact you at least a month before your fees are due to start, to set up your repayment arrangement.

Following the purchase of your home, you can choose at any time to make voluntary part-repayments (with a minimum part-repayment of 10% of the market value) to reduce the amount you must repay upon the sale of your home, or the amount to be repaid after 25 years.

You can also choose to make a full repayment of the equity loan at any time, so that upon sale of your home you do not need to repay any percentage of the proceeds of the sale.

Example

Below is an example of how Help to Buy could contribute towards the purchase of a new home:

Help to Buy Breakdown £ %
New home purchase price £400,000 100%
Deposit (paid by homebuyer) £20,000 5% 
Mortgage (arranged by homebuyer) £300,000 75% 
Help to Buy equity loan £80,000 20%

FAQS

If you’d like to know more, or if you want to apply for a Help to Buy equity loan to purchase a Duchy Homes property, please contact the sales team at the Duchy Homes development of your choice.

A full list of our developments can be found here.

Help to Buy homes are available on all Duchy Homes properties in England with a purchase price of up to £600,000.

To discover where our new homes are located and the prices, please visit www.duchyhomes.co.uk/developments and select the region in which you are interested in purchasing.

Yes. Your contribution must be 80% to 90% of the full purchase price of your new build home, which can be made up from a repayment mortgage of between 25% and 75%, and a cash deposit of 5% or more.

To ensure that government funding is allocated fairly to help as many buyers as possible, Help to Buy purchasers are expected to contribute the maximum that is reasonably affordable for them. Upon application, this is assessed by your local HomeBuy Agent. If you could reasonably afford more than 90% of the full purchase price, you will not be eligible to receive Help to Buy assistance.

You are free to sell your home at any time after purchasing. When you sell your home, you will repay the HCA equity loan simultaneously from a share of the sale proceeds (unless you have repaid the Help to Buy earlier).

The amount you must repay is the same percentage of the proceeds of the sale as the initial equity loan from the HCA (i.e. if you received an equity loan for 20% of the original purchase price of your home, you must repay 20% of the sale price).

If you have made part-repayments prior to the sale of your home, you will only repay the remaining % of the original equity loan upon sale of your property (i.e. if you received an equity loan of 20% and you have already repaid 10% before the sale of your home, you must repay 10% of the sale price).

If the market value of your property falls below the level at which it was first purchased, you will repay less than the original amount the HCA contributed. The amount to repay HCA upon the sale of your home will always be the same percentage of the sale proceeds as they originally contributed to the purchase price, which will not necessarily be the same amount. If the market value of your property falls, you will not be required to repay any shortfall in the equity loan upon the sale of your home.

No, part-exchange is not available in conjunction with a Help to Buy home.

No. Help to Buy is designed to help buyers move up the housing ladder and it must be your only residence.

*The Help to Buy equity scheme has specific terms and conditions and is subject to affordability criteria as prescribed by the Homes and Communities Agency. Help to Buy cannot be used in conjunction with part exchange. Availability of other incentives/offers subject to lender’s criteria and Duchy Homes’ discretion. Your mortgage lender’s deposit requirements may vary. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT. Please ask your Duchy Homes Sales Advisor for further information