Can you get a home equity loan in the UK?

Help to Buy: Equity Loan

Eligibility

You may be eligible for the scheme if you applied by 6pm on 31 October and you are:

• 18 or over
• a first-time buyer
• able to afford the fees and interest payments
• You cannot get the equity loan if you have ever:
• owned a home or residential land in the UK or abroad
• had any form of sharia mortgage finance
• You would have had to make a joint application if you’re married, in a civil partnership, or cohabiting with your partner (and you plan on continuing to live together).

All applicants must meet the eligibility criteria.

The property you buy with your equity loan

The property must be:

• a new-build
• sold by a Help to Buy registered homebuilder
• the only home you own and live in

It must not have been lived in by anyone before you buy it.

There’s also a ‘maximum property purchase price’ limit for the home you buy depending on which region it’s in. You can buy a home up to and including the maximum property purchase price limit.

Region                 Maximum property purchase price

North East                             £186,100

North West                     £224,400

Yorkshire and the Humber     £228,100

East Midlands                     £261,900

West Midlands                     £255,600

East of England                     £407,400

London                             £600,000

South East                     £437,600

South West                     £349,000

How it works

You’ll need to:

pay a minimum deposit of 5% of the property purchase price

arrange a repayment mortgage of at least 25% of the property purchase price

You can then borrow an equity loan to cover from 5% and up to 20% of the property purchase price of your newly built home. If the property is in London, you can borrow up to 40%.

The equity loan percentage you borrow is used to calculate your interest and equity loan repayments.

Example

Property purchase price Equity loan percentage Equity loan amount borrowed

Bought for £200,000 Borrowed 20% £40,000

The equity loan percentage used to calculate your interest and repayments is 20%.

Fees

You’ll need to pay a monthly management fee of £1 when you take out the equity loan until you pay it off.

If you change your equity loan, including if you remortgage or make an equity loan repayment, you’ll need to pay administration fees.

You’ll also have to pay other fees associated with buying and owning a home, for example, legal and mortgage arrangement fees and for market value reports.

North

enquiries@helptobuyagent1.org.uk

Telephone: 0300 790 0570

Midlands and London

enquiries@helptobuyagent2.org.uk

Telephone: 0333 321 4044

South (excluding London)

info@helptobuyagent3.org.uk

Telephone: 0800 456 1188

Can you get a home equity loan in the UK?

You can then borrow an equity loan to cover from 5% and up to 20% of the property purchase price of your newly built home. If the property is in London, you can borrow up to 40%. The equity loan percentage you borrow is used to calculate your interest and equity loan repayments.

How do home equity loans work UK?

The amount you borrow is based on the market value of your new home when you buy it. When you repay some or all of your equity loan, the amount you pay is worked out as a percentage of the market value at that time. If the market value of your home increases, so does the amount you have to repay.

How much equity can I borrow from my home UK?

Most lenders allow you to borrow up to a maximum of 80-85 percent of the amount of equity you have. For example, if you have £100,000 home equity you might be able to borrow around £80,000 to £85,000 tops.

Can I borrow against my house UK?

Borrowing against your house involves taking out a homeowner loan. You can find lenders in the UK who offer homeowner loans from £1,000 to £2.5 million. However, the amount you can borrow against your house will depend on several factors, including: The property's value.

How can I release money from my house UK?

Equity release works by borrowing cash against the value of your home. There are two ways to do this – a lifetime mortgage and a home reversion plan. Lifetime mortgages allow you to release some of your home value to a limit, while still being the homeowner. This cash is tax-free and able to be used as you please.