The new Help to Buy: Equity Loan (2021-2023) scheme has started, but Martin Lewis has issued an important warning.
Homes England announced that first-time buyers interested in new-build homes can apply for the new Help to Buy : Equity Loan scheme.
With a Help to Buy: Equity Loan, the government lends homebuyers up to 20% (40% in London) of the cost of a newly built home.
Customers pay a deposit of 5% or more and arrange a mortgage of 25% or more to make up the rest.
The equity loan is interest-free for the first five years, after it's 1.75% from year six and then rises by inflation annually.
Help to Buy (2021-2023) has regional price limits, set at 1.5 times the average first-time buyer price in each region in England.
And eligible first-time buyers will be able to reserve their homes from mid-December and get the keys to move in from April 1 2021.
However, speaking on his money show on ITV, Martin Lewis warned viewers that if property prices rise you repay more plus interest.
Martin explained that when you take out an equity loan, the Government owns a stake in your home.
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If your equity loan is equivalent to 20% of the value of your property, the Government essentially owns 20% of your home until you repay the loan.
That percentage stays the same regardless of the home's value, but if the property value rises or falls then the value of the Government's share will rise or fall with it.
