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Let's compare Help to Buy: Equity Loan & Shared Ownership

What are the differences?

Help to Buy: Equity Loan

  • This scheme helps you by keeping your mortgage payments lower.
  • If you can offer a deposit of 5% of the home's total value then you can borrow up to 20% (or 40% in London) of your home's value from the government. This loan is interest free for the first 5 years.

Shared Ownership

  • You part-own and part-rent your home.
  • The minimum share bought in a property is usually 25% but can be higher. The maximum initial share you can purchase is 75%.
  • The share you buy will be based on your affordability.
Cordage Works Oyster Specification

Who is eligible to apply for these schemes?

Help to Buy: Equity Loan

  • You must be 18 years old or over
  • You must be a first time buyer
  • The property you are buying must be a new build
  • The home you are buying is worth no more than £600,000 (area dependent)
  • You must be able to fund at least 80% of the purchase through a combination of deposit and mortgage

Shared Ownership

  • Your combined household income must be less than £80,000 (£90,000 in London)
  • You must be a first time buyer or if you have previously owned a home, you no longer own it or are in the process of selling
  • If you are an existing shared ownership owner you can sell your current Shared Ownership home to buy an alternative Shared Ownership property

Which scheme is better for you?

Help to Buy: Equity Loan and Shared Ownership help people get a foot into the housing market with smaller more manageable deposits.

Whilst both Help to Buy: Equity Loan and Shared Ownership are great ways to buy an affordable home, there are some key differences in how they work;

  • With Help to Buy: Equity Loan, you own 100% of the home but you will have two mortgages secured against it, one from a main mortgage lender (such as Halifax) and the second is the Help to Buy equity loan, granted by the UK Government.
  • With Shared Ownership, on the other hand, you will only have one mortgage secured against the home and you will own the share that you initially purchase, say 30%, with the housing association owning the remainder, 70% in this case. You can then buy out this unsold equity through a process called staircasing.