One in five Help to Buy equity loans are granted to non-first-time buyers – and 54.1% of these loans are used to fund detached properties.
Between its launch in April 2013 and also the end of June 2022, the Help to Buy equity loan scheme was utilized to part-fund 183,947 property purchases, based on data released through the government.
Loans taken out over this period totalled lb9.9bn, using the total worth of properties purchased coming to lb46.52bn.
Broken down, this means that the average buyer put a lb53,793 equity loan towards a lb252,888 property – but stark differences exist between the amounts granted to first-time buyers and people who’ve owned property before.
Non-first-timers benefit most out of Assistance to Buy
The Assistance to Buy equity loan scheme gives buyers in England a 20% government loan for the cost of a new-build property (or 40% working in london). The customer usually puts inside a 5% deposit and removes a home loan to pay for the remainder.
While many people consider Assistance to Buy as being a first-time buyer scheme, 1 in 5 purchases (19%) made using equity loans were by people who’d owned property before.
Non-first-timers are also getting bigger loans to finance pricier properties. In fact, the average Help to Buy home bought by a previous or existing homeowner cost almost lb60,000 more than one purchased by a first-time buyer.
|Average (mean) first-time buyer loan value
|Average (mean) non-first-time buyer loan value
|Difference in loan value
|Average (median) first-time buyer property value
|Average (median) non-first-time buyer property value
|Difference in property value
What kinds of homes are Help to Buy equity loans funding?
More people use Assistance to Buy equity loans to buy semi-detached properties than any other kind of home, according to the government data.
But, again, you will find differences between buyer types, with many first-timers buying semi-detached properties (33.1%) and non-first-timers stretching to detached houses (54.1%).
What’s happening with London Help to Buy?
In February 2022, the federal government launched London Help to Buy, meaning people buying in the capital may take out a 40% equity loan – double the 20% available elsewhere in England.
Despite this, over 93% of Help to Buy equity loans have been granted to people buying outside London. This can be explained because a 5% deposit on the London property costs substantially a lot more than it might in lots of other areas of the nation – so despite Assistance to Buy, a house within the capital remains unattainable for a lot of would-be first-time buyers.
Between the launch based in london Assistance to Buy and 30 June 2022, there have been 9,470 completions working in london – and 72% were made while using full 40% equity loan.
Interestingly, given London’s higher property prices, 95% of equity loan purchases in London are made by first-time buyers.
Help to purchase set to change from 2022
Critics have long argued which help to purchase should only be for first-time buyers, and changes announced in the Autumn Budget mean that, from April 2022, this will indeed be the case.
From that point on, the cost of the home being purchased may also be regionally capped, ranging from lb186,100 within the North East to lb600,000 in London.
Read our story around the way forward for Help to Buy equity loans to discover exactly what the price cap will be in your area.
Could you buy by having an equity loan?
Help to Buy could be a good way of getting on the property ladder, but it’s not without its pitfalls.
Two of the biggest concerns for borrowers would be the interest that kicks in after five years, as well as the difficulties many people have had in remortgaging by having an outstanding equity loan.
But should you choose believe that Assistance to Buy could be right for you, the calculator below can help you exercise whether you can manage to buy using the scheme.