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The Help to Build Equity Loan scheme is a new scheme to encourage those wanting to build their own homes to access mortgages more easily and with a smaller deposit requirement, opening up this sector to a much wider potential market.
The scheme is provided by Homes England, the government’s housing agency, and was launched on Monday 27th June with BuildStore and Darlington Building Society providing the mortgages.
Raymond Connor, CEO of BuildStore said:
“Help to Build is going to significantly boost the custom build sector, and property developers already have land earmarked for this purpose.”
“Homes England, which runs the Help to Build scheme, has a large register of people who have already expressed their interest in the scheme. Our own database consists of almost 1,000 people who want to take advantage of Help to Build.”
The scheme will allow applicants to borrow between 5% and 20% of their costs across England – and up to 40% in London. Total build costs cannot be over £600,000, or £400,000 if the land is already owned, and applicants must live in the property as a primary home. The money is released in stages and the borrower has three years in which to build their home. The loan is interest-free for the first five years.
The Help to Build Mortgage offers advance stage payments which means borrowers receive funds before the start of each stage of their project.
Borrowers can pay back the equity loan at any time after the build is finished but it must be repaid by the end of the mortgage term or when they sell their home.
The amount repayable is based on the property’s value at the time the equity loan is redeemed, not the amount that was initially borrowed. So, if the value of the property goes up the amount to pay off the equity loan will go up, and if it goes down in value, the amount to pay off the equity loan will be less than originally borrowed.
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