The new Help to Build Equity Loan Scheme has launched and is available to prospective self and custom builders in England.
The scheme has been allocated £150m over the next four years.
With some similarities to the existing Help to Buy Scheme, the Help to Build Equity Loan Scheme allows eligible applicants to undertake a self or custom build project with a 5% deposit.
An equity loan of 20% is provided by Homes England (up to 40% for London) and the balance of 75% (or 55% for London) is funded via a self or custom build mortgage.
The total cost of the project, including land, is capped at £600,000, with a maximum limit of £400,000 for the build costs.
This excludes professional fees, such as those incurred for architect’s designs, planning, engineer’s reports, which must still be funded separately.
Raymond Connor, chief executive of BuildLoan, said: “We have been waiting for Help to Build for a long time and, now that it’s here, we expect it to be extremely popular.
“The fact that people only need to find a 5% deposit by using this scheme, instead of typically 20-25% without it, is an extremely attractive proposition.
“Brokers should familiarise themselves with the Help to Build Equity Loan Scheme, as I can guarantee there will be lots of interest from people wanting to build their own home.
“No one knows the self and custom build sector better than BuildLoan.
“It’s not just about the mortgage, there are so many other considerations, and we can easily work with brokers to assist them in offering the best advice for their clients.
“BuildLoan will be working with our lender partners to develop products to support the Help to Build Equity Loan Scheme and make sure we are ready to lend as soon as we get the green light.”
Andrew Craddock, chief executive at Darlington Building Society, added: “Throughout its 165-year history, Darlington Building Society’s core purpose has been to help make the dream of home ownership a reality for as many people as possible.
“The society, therefore, warmly welcomes the government’s Help To Build initiative, which will make it easier and more affordable for people with low deposits to build their own homes.
“Building sufficient homes to meet increasing demand remains a key challenge for our country and the society views the introduction of Help To Build as an important step towards supporting the delivery of self and custom build housing at scale.
“We also believe that this initiative supports the green agenda by opening up greater opportunities to build high-quality, well-designed, and energy-efficient homes – thereby making a valuable contribution towards the Net Zero Housing ambitions.
“Over the past 10 years, Darlington Building Society has partnered with BuildLoan to develop a wealth of experience in the self and custom build market and we are delighted that we will be one of the first lenders to offer mortgages in support of Help To Build.
“The beauty of this scheme is that it will not only help more people onto the property ladder but enable them to become the proud owners of homes that have been tailor-made to suit their specific needs and aspirations.”