Help to Buy loans see rise of 85%

A total of 10,824 properties were bought with a Help to Buy equity loan between April and June, new government figures have revealed.

The figure is an increase of 85% on the same Q2 period in 2020.

According to the latest data, 339,347 properties have now been bought with an equity loan up to 30 June 2021, since the scheme started on 1 April 2013.

The total value of these equity loans so far totals £20.9bn, while the value of the properties sold under the scheme comes to £94.4bn. The government data also revealed that 83% of all completions have been made by first-time buyers.

Commenting on the statistics, Hargreaves Lansdown senior personal finance analyst, Sarah Coles, suggested that “runaway house prices” mean government schemes for homebuyers are “more valuable than ever”.

However, she warned: “When it comes to the Help to Buy equity loan scheme, they’re more expensive than ever too.

“Government schemes have provided a vital leg up for buyers as prices climbed this past year, through Lifetime ISAs, Help to Buy ISAs and the Help to Buy equity loan scheme. However, anyone considering the Help to Buy equity loan scheme needs to be aware that rising prices could also make their loan eye-wateringly expensive further down the line.”

“When the equity loan is eventually repaid to the government, the amount that needs to be paid back depends on the value of the house at that time. If, for example, an individual borrows 20% of the purchase price, they repay 20% of the value when they eventually remortgage, meaning that when prices rise the repayments do also.

“If you borrowed 20% from the government to buy the average property in June 2015, and then you repaid the loan in June 2020, you’d have had to pay back £7,581 more than you borrowed,” Coles highlighted. “The rising market in the past 12 months means that someone doing the same a year later would have had to repay £10,557 more than they borrowed – so the rising market cost them almost £3,000.”

The Help to Buy: Equity Loan 2021-2023 scheme was announced in 2018 and launched on 1 April 2021. The scheme is similar to the 2013 to 2021 scheme but has tighter restrictions on who can use it as well as the purchase price of the properties, which is capped by region.

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