Nerrols Grange

Who is eligible?

1.1 This offer is only available to eligible first time purchasers (“you/purchasers”) on selected new build plots and developments in England only (excluding London). This new scheme operates from 1 April 2021 to 31 March 2023. The amount you can borrow is dependent on the region the home you wish to buy is in.

1.2 Help to Buy is only available on repayment mortgages and on properties which are occupied by the individual or individuals taking out the mortgage.

1.3 To access the equity loan, you must satisfy the “Eligible Purchaser” criteria set out by Homes England and all purchaser(s) must be approved by the Help to Buy Agent. Further information on the “Eligible Purchaser” criteria is available from: https://www.gov.uk/government/publications/help-to-buy-equity-loan-buyers-guide.

How does it work?

1.4 Purchasers will be required to raise funding (which includes a mortgage and a deposit) of not less than 80% of the property purchase price (excluding any mortgage fees). The property will be subject to a first charge in favour of the mortgage company. Your deposit must be a minimum of 5% of the full property purchase price. The mortgage lender's criteria may affect any deposit percentage and whether it applies before or after the equity loan is deducted from the purchase price.

1.5 Homes England will provide an equity loan to eligible first time purchasers of not less than 10% and not more than 20% of the full purchase price subject to the terms of the equity loan agreement.

1.6 The equity loan provided by Homes England will be secured by way of a second charge on the property behind the first charge referred to in paragraph 1.4.

Paying back the equity loan

1.7 Purchasers must agree to repay the loan in full, plus any interest accrued and management fees.

1.8 For the first 5 years, the equity loan provided by Homes England is interest free. There is a payment of a £1 monthly management fee to pay by Direct Debit.

1.9 From year 6, interest will be payable by you at an annual gross rate of 1.75% of the amount you borrowed. The figure will rise each year in April by2%. You will also continue to pay the monthly management fee of £1 for the life of the loan. The above fees do not count towards paying back the equity loan.

1.10 You must repay the equity loan to Homes England when you: (i) sell the property; or (ii) pay off the repayment mortgage on the property; or (iii) reach the end of the equity loan term which is 25 years from legal completion of the property.

1.11 You can repay the equity loan to Homes England at any time following legal completion. Repayment whether in full or in part will be based on the market value of the property at the time of the repayment(s) and you will have to arrange and pay for the valuation of the property at that time. The minimum instalment value is 10% of the total of the equity loan.

1.12 If you are selling your property, the equity loan will be repayable on either (i) the market value of your property; or (ii) the price your property sells for, whichever is the highest. This means that if the property increases, so does the amount you repay on your equity loan. If the value of your property decreases, the amount you owe on your equity loan will also decrease. This may result in Homes England being paid more or less than the original loan value.

1.13 If, on the sale of the property, the price of the property has fallen and there is insufficient money from the sale to repay the equity loan after the mortgage has been paid you will lose any deposit you paid towards your property. Homes England will not however seek to recover the balance of their equity loan from you.

1.14 Detailed terms and conditions apply to the equity loan which will be made available to the purchaser via their legal advisors as part of the conveyancing process.

An example of how Help to Buy works in the West Midlands region is as follows:

Maximum house value: £255,600

Mortgage

£191,700

(75%)

Deposit

£12,780

(5% of full purchase price)

Equity loan

£51,120

(20% provided by Homes England)

Purchase price

£255,600

(Based on maximum West Midlands region price cap)

The equity loan provided by Homes England will not incur any loan fees for the first 5 years. From year 6, interest will be payable by the purchaser at an annual gross rate of 1.75% of the amount you borrowed. The figure will rise each year in April by the Consumer Prices Index plus 2%.

Open market value

£319,500

(a 25% uplift in value)

Mortgage repayment

£191,700

(assuming no repayment of capital)

Equity loan

£63,900

(20% of the open market value)

Remainder available to purchaser

£63,900