Equity Loan MortgageShareholders' equity Loan Mortgage
It can be useful for a variety of borrower who want to buy a new building, so it's worth knowing exactly how the schema works and how it can help your customers. Does the equity loan schema work? The Equity Loan Schema - sometimes called " Help to Buy 1 " - is an equity loan program that assists home buyers to buy a new home.
Borrower can obtain from the government an equity loan of up to 20% of the value of the real estate, which means they only need a 5% down payment and 75% mortgage to make the sale. One particularly appealing characteristic for the borrower is that no charges are payable on the equity loan for five years, although there is a 1 pound per month administration charge.
Five years later, the purchaser pays an annuity (which can also be payable monthly) depending on the amount of equity. Every year thereafter, the charge increases according to the retail price index plus 1%. After 25 years or when the real estate is sold, the equity loan must be repaid.
Clients also have the opportunity to "step up" their equity loans so that they can repay the loan either cyclically in the form of money or by renewing their mortgage. For whom is the program intended? After all, the Help to Buy agents procedure does not include a solvency check: while a borrowers is considered for the Help to Buy program, they may not be able to take out a mortgage.
The Equity Loan Plan may differ in different parts of the United Kingdom. In London, for example, the equity loan can be hedged up to a max. of 40% of the sales proceeds. However, the maximal value of a real estate that can be purchased through the schema also changes according to the area.