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Government Help to Build Equity Loan


jen and mark
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Hi guys,

 

Just came across this new guidance for Government backed equity loan for self build https://www.gov.uk/government/publications/help-to-build-making-building-your-own-home-more-affordable/help-to-build-equity-loan-prospectus-accessible-version

 

What do our money savvy forumites think? Is this a good thing or are there pitfalls? We are converting a double steel barn (under class Q). Would we be eligible?

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Yes - thats what I thought. TBH the whole prospectus left me a little bewildered. We are hoping to build for much less than it would cost to buy. Why have they linked it to the value of the finished home not amount borrowed? Surely we will lose out!

 

Have @nod and myself missed any crucial small print?

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5 minutes ago, jen and mark said:

Yes - thats what I thought. TBH the whole prospectus left me a little bewildered. We are hoping to build for much less than it would cost to buy. Why have they linked it to the value of the finished home not amount borrowed? Surely we will lose out!

 

Have @nod and myself missed any crucial small print?

I’m just read through the rest

Plus side is Apart from an initial deposit 

5% They are financing your build for five years 

 

Whilst most of us have built for far less than our homes are worth 

Which is a good thing 

Under this scheme you are penalized for things turning out better than you anticipated 

 

Theres quite a few on here who have taken out fantastic value self build mortgage deals 

I’m sure there will be someone along shortly 

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  • 3 months later...

Agree with everyone here.

 

Understand there are some benefits, but I am not sure why anyone would go for this help to build scheme as you will, in most circumstances be creating value and so the loan increases in line with that value? Linking it to value just means you pay back a chunk more plus the interest and repayments from y5 onwards.

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Assuming you can repay the loan at any point, the future cost need not be an issue. However this loan ought to make builds possible that would not be affordable otherwise. I'm desperately waiting for this to go live (gov promised it would launch in the winter, well, they have two more days of that left).

 

It should mean (confirmed by Build Store brokers), that your deposit can be increased by the value of the gov loan. For example lets assume a build cost of £350k. If someone has an £80k deposit and their income multiple would allow a £200k mortgage, for a total £280k this build is not possible. However with the gov loan this could be increased to £350k with the 20% deposit contribution, making it possible. At least this is my understanding of the scheme. 

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