A government equity loan to help fund your custom or self build home.
Making building your own home more affordable
Help to Build is a new government equity loan that will be available to people in England who want to custom build or self build their own home.
Custom build and self build homes are not just for people who have owned or built a home before. Help to Build can make building your own home a realistic choice, even if you have a small deposit.
A custom build or self build home means that you can decide on the:
- design – building in features that suit your lifestyle, such as energy efficiency and smart technology
- internal layout – designing a home that will suit your family’s specific needs
- location – homes can often be the size and scale you want, built on smaller plots of land available for development in the area you want to live.
Applications will open for Help to Build: Equity Loan during winter.
Different types of build
With custom build, you work with a professional homebuilder who organises and manages the entire build project for you.
With self build, you handle every stage of the project. This includes buying the plot of land, building materials, and hiring contractors.
With a shell build, a professional takes responsibility for building the structure of your home (foundations, external walls, roof, and so on). You take responsibility for completing the internal layout and design (walls, room sizes, layout, and so on).
Who’s eligible for Help to Build
You can apply for Help to Build if you:
- are 18 years of age or over, and have a right to live in England [footnote 1]
- will live in the newly-built home as your only home
- secure a self build mortgage from a lender registered with us for Help to Build.
Most lenders will need you to have outline planning permission for the land you want to build on before they assess or approve your self build mortgage. You’ll need to ask your preferred lender about this before you apply.
We’ll carry out checks to make sure you can afford the equity loan payments and meet our anti-money laundering requirements.
If we offer you an equity loan, you’ll have 3 years to build your home.
Key things to know about Help to Build
You’ll need a deposit of at least 5%, and need to meet other eligibility criteria to use the Help to Build: Equity Loan scheme.
Help to Build is not a discount on the price of the home – the land and build costs of the home will be the same without an equity loan.
The equity loan is not interest free. We do not charge interest for the first 5 years, but you will start to pay it from year 6.
The total amount you repay at redemption is linked to the value of your home at the time, and not the amount you originally borrowed.
You must repay your equity loan at the end of the term (normally 25 years), when you sell your home, pay off your mortgage, or you can repay at any time before.
You’ll pay a £1 monthly management fee for the life of the equity loan.
When you apply for the equity loan, your self build mortgage must be provided by a lender registered with Help to Build. Once your build is complete, your self build mortgage will automatically switch to a repayment mortgage which must be in place for the duration of the equity loan.
How Help to Build works
With Help to Build, we can offer you an equity loan based on the estimated costs to buy a plot of land and build the home.
The equity loan amount can be between 5% and 20% (up to 40% in London) of the total estimated cost.
If you’re eligible, you can spend up to £600,000 on your new home. This must include the cost of the land if you don’t already own it, and no more than £400,000 on the cost to build it.
If we offer you an equity loan, you’ll have 3 years to buy the land (if needed) and build your home.
You’ll need a deposit of at least 5%, and a self build mortgage to pay for the land and build phase.
Your mortgage lender will release funds to you at various stages of the build, until your home is finished.
After you build your home, you get your equity loan
You only get your equity loan and start to pay fees for it after you’ve built your home.
When your build is complete, we will pay your mortgage lender the equity loan amount that was offered, and your self build mortgage will automatically switch to a repayment mortgage.
This guide is for information only and must not be considered advice. Consider getting independent financial advice about whether Help to Build is right for you.
During the build
What you’ll borrow from your mortgage lender when your home is being built:
Deposit: £20k (5%)
Self build mortgage: £380k (95%)
Total amount: £400k
After the build
What you’ll borrow from your mortgage lender and us when your home is complete
Once your home is ready and you’ve told us you want the equity loan, we’ll pay it to your mortgage lender. This will reduce the amount you need to borrow from them on a repayment mortgage.
Equity loan offer outside of London: £80k (20%)
Deposit: £20k (5%)
Equity loan: £80k (20%)
Repayment mortgage: £300k (75%)
Total amount: £400k
Equity loan offer inside of London: £160k (40%)
Deposit: £20k (5%)
Equity loan: £160k (40%)
Repayment mortgage: £220k (55%)
Total amount: £400k
This information is for illustrative purposes only. Actual figures may vary depending on your individual circumstances. Some mortgage lenders will ask you to set aside a contingency budget (extra money). This is to cover any unexpected circumstances or costs during the build phase. Consider getting independent financial advice about whether Help to Build is right for you.
Equity loan term, payments and fees
The amount we lend you is based on a percentage of your estimated land and build costs. However, the amount you pay back is worked out as a percentage of your home’s market value at the time you choose to repay.
If the market value of your home rises above the estimated land and build costs, so does the amount you owe on your equity loan.
If the value of your home falls below the estimated land and build costs, the amount you owe on your equity loan falls too.
With Help to Build, you pay interest on the amount you borrowed. Interest payments do not go towards paying off your equity loan.
We do not charge you interest for the first 5 years that you have your equity loan.
You start to pay interest monthly from year 6, on the fifth anniversary that you took out your equity loan.
Your first interest payment will be 1.75% of the equity loan amount you borrowed (which represents the equity loan percentage of the estimated land and build costs).
Your interest will go up each year in April by the Consumer Price Index (CPI), plus 2%. If the CPI is zero or less, we will use a value of 0% to calculate the interest rate increase. This means that the interest rate increase will be a minimum of 2%.
We work out your payment as an annual figure, then divide it by 12 to work out the monthly instalments you pay.
Payments, fees and equity loan term
Equity loan term
Standard term of 25 years. (If your mortgage deal is for more than 25 years, we will extend the term of your equity loan to match it.)
Repayment mortgage (also known as a capital and interest mortgage)
You must have a repayment mortgage if you have an equity loan from Help to Build. A repayment mortgage reduces what you owe until there’s nothing left to pay. The repayment mortgage must be from a qualified lender.
Interest
We charge interest for lending you the funds to build your home. We work out the yearly fee and divide it into 12 equal instalments.
We collect interest payments monthly by Direct Debit.
Interest rate:
- Years 1 to 5: fixed rate of 0% each year (until the fifth anniversary of loan)
- Year 6: fixed rate of 1.75% each year
- Year 7 onwards: the previous year’s interest rate will increase by 2% plus CPI (or a minimum of 2% if the CPI is zero or less)
Management fee
Monthly: £1 (you pay this in month one, and then every month until your equity loan is repaid).
Other fees
There may be other fees and third-party costs associated with making changes to your equity loan, such as if you remortgage.
Get expert help and advice
Custom or self building a home can feel overwhelming, so it’s important to seek expert advice.
While Homes England provide your Help to Build: Equity Loan, we do not offer:
- financial or legal advice
- advice on the building process
- builder mediation services
We can point you in the right direction to other organisations who provide free and impartial information.
Homebuilding
The National Custom and Self Build Association (NaCSBA) is the voice of the custom and self build housing sector. Their mission is to make custom and self build a mainstream choice for everyone seeking a home of their own.
NaCSBA works to share knowledge and best practice across the sector and advise you through their Self Build Portal website. Local councils must keep a list of anyone who wants to custom or self build, and you can find the registers local to you there.
Local authority planning and housing teams can get planning advice and information on the Right to Build Task Force website.
The National Self Build and Renovation Centre is a permanent venue offering independent advice and support to those who want to build their own home. They offer events, courses, exhibitions and expert advice.
Finance matters
MoneyHelper is an independent organisation set up by the government. It has a range of free and unbiased tools and advice for homebuyers, including understanding mortgages, how much you can afford to borrow, and using a mortgage adviser.
To find a financial adviser or mortgage broker, search the financial services register.
Stamp duty
For information on stamp duty land tax and the latest rates, visit Stamp Duty Land Tax.
HM Land Registry
For information on registering land or property, and search services, visit HM Land Registry.
Legal matters
For help in finding a solicitor, search The Law Society’s online database or call 020 7320 5650.
For your local Citizens Advice, visit the Citizens Advice website.
Your home is at risk if you do not keep up repayments on a mortgage, equity loan or other loan secured against it.
Applications open for Help to Build during winter. To be first in line for more information, register your interest in Help to Build now at: https://help-to-build.homesengland.org.uk/
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Homes England provide the Help to Build: Equity Loan. We are an executive non-departmental public body sponsored by the Department for Levelling Up, Housing and Communities.
Homes England as an entity and Help to Build: Equity Loan as a product are exempt from the Financial Conduct Authority (FCA) authorisation and regulation.
Your home is at risk if you do not keep up repayments on a mortgage or other loan secured against it.
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