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Help to Build

Are your client’s homebuilding dreams are on hold because they don’t have enough cash of their own or are worried about the monthly costs?  The Help to Build Equity Loan Scheme may be the solution they need.

A more affordable way for your clients to self or custom build 

Help to Build provides the self or custom builder with a mortgage of up to 95% of their land and build costs – meaning they only need to find 5% of their project costs themselves.*

The Help to Build Equity Loan of up to 20% of their approved land and build costs (40% in London) reduces their monthly payments.  The equity loan is interest-free for the first five years, making the monthly payments much more affordable.

As the leading expert in this field, BuildLoan can guide you so you can help your clients through the Help to Build application process, and provide best advice.

*T&Cs apply.  Funding for professional fees such as the costs of design, planning, warranty and building control can be included under the scheme subject to agreement with the principal lender, however, it should be noted that there may be some other costs that are excluded and these will need to be paid for separately.

Download Help to Build Guides 

The Help to Build Equity Loan

The Help to Build Equity Loan is paid to the mortgage lender when the build is complete and will reduce the mortgage balance and monthly payments.  Your clients have three years to complete their build.

Your client must repay the equity loan at the end of the mortgage term or when they sell their home.  They can redeem their equity loan at any point once their build is finished.  If the mortgage is less than 80% of the value of the completed property, the lender may not require your client to draw down the equity loan, provided the mortgage is affordable.

Help to Build does not provide a discount on the price of the home – the land and build costs will be the same without an equity loan. The Equity Loan is not interest-free.  Interest is not charged for the first five years, but clients will start to pay interest from year six.

The total amount your clients will repay is linked to the value of their home at the point of redemption , and not the amount initially borrowed.

 

 

Help to Build
Darlington

Help to Build Mortgages

BuildLoan has launched the first ever Help to Build Mortgages in partnership with Darlington Building Society.  There are two products in this first Help to Build mortgage range, both three year discounted rates at either 5.39% or 5.99%.

Like many of BuildLoan’s products, the Help to Build mortgage offers advance stage payments which means borrowers receive funds before each stage of their project.

More lenders will be launching their products over the next six months in partnership with BuildLoan.  Read more

 

Help to Build Equity Loan Facts

What is the aim of the scheme?

The government aims to build 300,000 homes annually by the mid 2020s.  It wants to diversify the housing market by providing new options to customers.  The Help to Build Equity Loan Scheme is designed to make undertaking a self or custom build project in England more attainable for greater numbers of people in England with just a 5% deposit* required.

*T&Cs apply. Funding for professional fees such as the costs of design, planning, warranty and building control can be included under the scheme subject to agreement with the principal lender, however, it should be noted there may be some other costs that are excluded and these will need to be paid for separately.

Who is the scheme for?

The scheme is open to all customers who meet the eligibility criteria and who want to build or commission their own home in England.

What are the eligibility criteria?

To qualify for the Help to Build Equity Loan Scheme, your clients must meet the following criteria:

  • Aged 18 or over
  • Right to live in England and are building a home in England
  • Must not own any other residential property, including buy to lets, in the UK or elsewhere in the world.  This applies to anyone else living in the property
  • Will occupy the property as their only or main residence, immediately following the completion of the build
  • Satisfies Homes England’s anti-money laundering requirements
  • Must pass the sustainability requirements set by Homes England
  • Able secure a self build mortgage with a registered lender
  • Construction hasn’t started on the project
  • The project costs (including the land cost) are no more than £600,000
How does the scheme work?

With self and custom build, the typical deposit required is 20% – 25%.  With the Help to Build Equity Loan Scheme, your clients only need to contribute 5% with the government topping up the other 20% in the form of an equity loan.  The remaining 75% will take the form of a self build mortgage.

The equity loan is paid to the lender by the government on completion of the build.

The maximum loan amount available under the scheme is £600K, though with maximum limits of £200K for the land and £400K for the build costs.

The minimum customer contribution is 5% of the property’s initial land and build costs.*

The maximum Homes England contribution will be:

  • Outside London area – 20% of the initial land and build costs capped at £120K
  • London area – 40% of the initial land and build costs capped at £240K

The maximum term to drawdown for Help to Build equity loan approval is 36 months.

No interest is payable on the equity loan for the first five years.

*T&Cs apply. Funding for professional fees such as the costs of design, planning, warranty and building control can be included under the scheme subject to agreement with the principal lender, however, it should be noted there may be some other costs that are excluded and these will need to be paid for separately.

How is the equity loan paid and repaid?

The government equity loan is paid to the lender on completion of the property to pay off part of the mortgage.  The self build mortgage must switch to a repayment mortgage.

Borrowers do not pay any interest on the equity loan for the first 5 years.

From year 6, interest will be charged at a fixed rate of 1.75% per annum.  From year 7 onwards, interest will be the previous year’s interest increasing by 2% plus CPI.

A management fee of £1 per month is payable for the whole term of the equity loan by direct debit.

 

 

 

Is the scheme only open to first-time buyers?

No – the scheme is open to anyone who meets the eligibility criteria.

When will the scheme expire?

The scheme will run for a period of four years from December 2021.  The last permissible timing for draw down will be 2028.

What is meant by a self or custom build home?

Self and custom build is defined under the Self Build and Custom Homebuilding Act 2015.

  • Building or completion must be undertaken by individuals, an association of individuals or persons working with or for individuals or associations of individuals, of houses to be occupied as homes by those individuals.
  • It does not include the building of a house wholly or mainly to plans or specifications decided or offered by that person.
What types of property are eligible?
  • The property must be a new build property. Newly constructed and completed dwellings, including flats created by utilising the airspace above an existing property (provided it has its own address), converted commercial premises and any conversions, which have not been used as residential dwellings, immediately before conversion are eligible; houses split into flats are not included in the definition.
  • Any property (a house or building), which has been previously occupied, either by an owner-occupier, licensee or a tenant, which is to be demolished in full, in order to build a new self and custom build property, may be eligible for approval.
  • Shell properties, designed to allow customisation of internal walls, completion of second fix and final fit out are permissable
  • Leasehold houses are not eligible for the scheme, except in the exceptional circumstances permitted under the Help to Buy scheme.  For leasehold flats, ground rent must not exceed a peppercorn per annum.
  • Self build warranties are required and need to be in place before completion.
Are there any restrictions on what clients can build?

Specific construction types, materials and acceptable design will be in accordance with individual lender criteria.  Our lenders will consider most modern methods of construction and you will receive a lender match listing all of the products suitable for your client’s build and circumstances.  Total build costs should not exceed £400,000.

There are some property eleigibility requirements laid out by Homes England which our dedicated broker desk will be able to advise you on.

Do my clients have to drawn down the Equity Loan once their build is finished?

This will be a condition of the mortgage offer by the lender; however, if when your clients have completed their home their mortgage is less than 80% of its value and they can afford the mortgage on an ongoing basis, the lender may not require them to draw down the equity loan.

Application Process

BuildLoan will guide you through the application process.  We can check your client is eligible for the scheme and help you to secure a mortgage for them.  Get in touch with our Broker Support Team for more information.

Help to Build Mortgages

For the first time, Help to Build creates a level playing field for self build, custom build and new build. Help to Build allows young people and those with smaller budgets to access to self build mortgages with as little as a 5% deposit.