Homeowners who are struggling to pay interest fees on their Help to Buy equity loans will be offered payment holidays, the Government has announced.
Yesterday the Government announced mortgage lenders had agreed to support customers experiencing personal financial difficulties as a result of Coronavirus (Covid-19), including through payment holidays, among other options.
This approach will also be adopted where necessary for Help to Buy customers paying interest on their Equity Loans.
Help to Buy: Equity Loans are interest-free for the first five years. Therefore, yesterday’s announcement will apply to those who took out the loan before 31 March 2015.
“We will do all we can to support Help to Buy customers through this unprecedented period of economic uncertainty,” Help to Buy Director Will German at Homes England said. “Like other lenders, we will offer payment holidays for those who are struggling to pay interest fees on their equity loans. We will also offer a range of flexible payment options to defer interest payment for a period. In all cases, we will seek to support households in difficulty.”
Monthly mortgage payments tend to be the largest outgoing for the vast majority of households. Households that make equity loan payments under the Help to Buy scheme will be offer similar options to their main mortgage lender.
All cases of hardship will be assessed on a case-by-case basis. The first step for customers experiencing difficulty related to Coronavirus is to contact their main mortgage lender to discuss revised payment arrangements. They should then contact Help to Buy equity loan administrator to discuss the options available to them.
“Please don’t struggle in silence,” Will German said. “As soon as you think you might have difficulty making payments on your Help to Buy: Equity Loan account, get in touch – help is at hand.”
The Help to Buy: Equity Loan administrator can be contacted through 0345 848 0236 or Target.HCA@targetgroup.com.
Further information on the Government’s measures to provide support for public services, individuals and businesses to minimise the impact of COVID-19 can be found here.
About the Help to Buy: Equity Loan scheme
The Help to Buy: Equity Loan scheme began on 1 April 2013 with the aim of improving home affordability for potential homeowners and driving up new housing supply.
A Help to Buy: equity loan is an equity loan on a new-build home with a purchase price of up to £600,000. Borrowers pay 5% deposit; the Government lends up to 20% (up to 40% in London) and a mortgage of up to 75% (55% in London) makes up the rest.
The current equity loan scheme, which is open to first time buyers and people moving up the property ladder ends on 31 March 2021. It will be replaced with a new scheme on 1 April 2021 for first time buyers only.
Help to Buy: Equity Loans are interest-free for the first five years. From then on it is payable at an interest rate of 1.75%, plus 1% above the Retail Price Index (a measure of inflation).
Image: Wayhome Studio
