Mr X wants to buy a two bedroom new build property worth £600,000 through Gareth James Property. Mr X only requires a 5% deposit of £30k from his own pocket.
Mr X must be a first time buyer or must not own any other another property currently to benefit from Help2buy.
The government then steps in with an equity loan of either 20% outside of London or 40% within London. The equity loan is also interest free for 5 years. After the 5 years, interest is then payable on the equity loan at a reduced government rate of interest.
You therefore only pay interest on the balance (the mortgage amount of 55%) for the first 5 years. If the property is sold, anytime, you will pay back the percentage of the equity loan either 20% or 40% based on current market values. See example 2 below
Mr X sells his two bedroom property now worth £660,000.
£264,000.00 - 40% of the sale value is paid back to the government
£330,000.00 - the original mortgage loan is repaid to mortgage lender
£66,000.000 - Your initial 5% deposit plus any profits given back to you