The name alone suggests a similarity to the Help To Buy scheme, but with the Help To Build scheme, support is available for people undertaking a custom or self-build project. A key attraction of the scheme is that people are only required to offer a 5% deposit, which hopefully makes this an affordable scheme for many would-be homeowners.
How to qualify for the Help To Build loan
The criteria for the Help To Build loan includes:
- Borrowers needing 5% for the deposit
- The Government will then offer an equity loan between 5% and 20% of the estimated total cost, and this figure rises to 40% in London
- The remainder of the mortgage cost is covered by a self-build mortgage
Key components of the Help To Build loan is that it will cover projects up to £600,000, which will include the cost of land if this isn’t already owned. The maximum amount that can be spent on building costs is £400,000.
There will be no interest payments charged on the loan’s equity element in the initial five years. For commercial self-build projects, standard interest charges will be applied.
When someone has been granted a Help To Build loan, they will have three years to purchase the land, and then build the property.
The initial interest payment will equate to 1.75% of the equity loan amount borrowed. In April of each year, interest rises by a sum equal to the Consumer Price Index, the CPI, plus 2%. If the CPI drops below zero, the interest rate will increase by 2%.
How much money has been allocated to the Help To Build loan scheme?
A total of £150m in Government funds have been allocated to the scheme over the next four years.
Raymond Connor is the chief executive of BuildLoan, and he said; “We have been waiting for Help to Build for a long time and, now that it’s here, we expect it to be extremely popular. The fact that people only need to find a 5% deposit by using this scheme, instead of typically 20-25% without it, is an extremely attractive proposition. Brokers should familiarise themselves with the Help to Build Equity Loan Scheme, as I can guarantee there will be lots of interest from people wanting to build their own home. No one knows the self and custom build sector better than BuildLoan. It’s not just about the mortgage, there are so many other considerations, and we can easily work with brokers to assist them in offering the best advice for their clients. BuildLoan will be working with our lender partners to develop products to support the Help to Build Equity Loan Scheme and make sure we are ready to lend as soon as we get the green light.”
How to explore your mortgage options with The Money Hub
If you are looking to build your home but need a helping hand, the Help To Build scheme is likely to be of considerable interest.
Call The Moneyhub Limited on 0203 725 5830 and speak to one of our highly specialised and dedicated Mortgage Advisors or you can complete an enquiry form which will allow you to schedule a call time.
DISCLAIMER: These articles are for information only and should not be construed as advice. You should always seek advice prior to taking any action.