Lending terms - minimum deposit
We require a minimum deposit of 5%* of the full purchase price of the property which can only come from the applicant's own resources, a gift from family or friends, or a combination of both. A completed Gifted Deposit Form is required for all applications where any of the deposit has been gifted.
*For Help to Buy Equity Share: Scotland, where the property is a New Build flat, a minimum deposit of 10% is required.
For British Forces personnel, Long Service Advance of Pay (LSAP) can be used as part of the deposit, but must be in addition to the 5% from the above. Forces Help to Buy scheme loans can't be used in conjunction with Equity Share Loan schemes, and therefore aren't an acceptable deposit type.
The minimum deposit must be based on the full purchase price - see example below:
Example based on a 5% deposit
Equity Share Loan 80/20 split (20% retained by Equity Loan shareholder)
- Full price = £100,000
- Equity Share Loan = of £20,000
- 5% deposit = £5,000
- Maximum loan available = £75,000
- LTV = 75% of the full price
We will not accept Equity Share Loan cases where a builder deposit/cashback is offered even if it's in addition to the acceptable deposit sources listed above. If the deposit is found to have come from an unacceptable source and a mortgage offer has been issued this could result in the withdrawal of the offer.
Incentives offered by a builder such as offers to pay stamp duty land tax, legal costs, the purchase of white goods are acceptable provided the applicant provides a minimum 5% deposit from their own resources.
We will only accept specific types of Equity Share Loan holders as follows:
|Equity Share Loan holder||
Max percentage retained by Equity Share Loan holder
|Volume Builder i.e. regional, national||
|National/Local* Government or Housing Association||
|Help to Buy||
|Help to Buy London||
|Help to Buy: Scotland||
*Up to maximum of 50%. Please check specific details of the scheme due to regional variations.
The Equity Share Loan holders listed below are unacceptable:
- Third party investors.
- Individual private vendors.
- Family members.
- Selling agents.
- Self employed builder or property developer.
3% of the Equity Share Loan is included as an outgoing when calculating affordability, example shown below:
£30,000 Equity Share Loan x 3% = £900
÷ 12 = £75 monthly outgoing for affordability calculation
NB. During application NFI Online will calculate the charge automatically based on the loan requirements figures. For more tips and help on keying in Equity Share Loan cases, please read our Equity Share Loan Keying guide.
Other lending terms
- We must have first charge over the whole property.
- There must be no requirement to repay the Equity Share Loan for at least five years and during this period there must be no interest charged on the loan.
- Applicants must be informed that we can't guarantee to make additional funds available at a later date in order to repay the loan.
- LTV% calculations for both products and credit scoring will be based on the open market price/value.
- Equity Share Loan applications only accepted on a capital and repayment basis.
- Applicants who are non-EEA nationals must have indefinite leave to remain.
- Equity Share Loan applications are not accepted in combination with any other affordable housing schemes, such as Shared Ownership, Sheltered Housing, or Resale Price Restrictions under a Section 106 Agreement.
- The mortgage term cannot extend beyond the date that the repayment of the equity loan first becomes due, except government schemes which have the automatic right to extend to cover a main mortgage term so their Equity Loan term is the same as the main mortgage. This only relates to the repayment of the equity loan capital and not the interest.
- We can't accept remortgage applications where an existing Equity Share Loan will continue. Remortgage applications where the Equity Share Loan is to be redeemed in full can proceed as a standard remortgage application.
Equity Share Loan mortgages are available on Nationwide dedicated equity share purchase products.
- The property being purchased must be the applicant's main residence and therefore can't be a second home or a Buy to Let property.
- The applicant isn't permitted to own another, or hold an interest in another property at the time of purchase.
- Maximum purchase price is £600,000 for England and £300,000 for Wales. The maximum purchase price for Scotland will reduce each year with a value of £230,000 in 2016/17, £200,000 in 2017/18 and £175,000 in 2018/19.
- Available only on new build properties in England, Scotland and Wales.
- Properties which have been previously occupied either by an owner occupier or a tenant before sale may not be purchased with Help to Buy assistance.
- Properties which are subject to a Section 106 or Section 75 agreement are not eligible.
England: The Equity Share Loan is interest free and carries no fees for the first five years. From year six a fee of 1.75% is payable on the Equity Share Loan, which rises annually by RPI inflation plus 1%. The Equity Share Loan can be repaid at any time within the term of the mortgage, or on sale of the property.
Wales: The Equity Share Loan is interest only, with a £1 monthly administration change payable in the first five years. From year six interest of 1.75% is payable on the equity loan, which rises annually by RPI inflation plus 1%. The Equity Share Loan can be repaid at any time within the term of the mortgage, or on sale of the property.
Scotland: The Equity Share Loan is interest free and carries no fees for the lifetime of the loan.
Acceptable Builder Incentives
- Builder Deposits are not accepted; the deposit must come from the applicant's own resources or a gift from family/friends.
- Other builder sales incentives are permitted, so long as they do not exceed 5% of the property value.
- The scheme prohibits a builder taking a buyers existing property in part-exchange for the new one.
In addition to the above, Help to Buy applications will be processed using the same procedures and lending terms as any other acceptable Equity Share Loan application. Please ensure you refer to our Equity Share Loan Schemes criteria for details of the process and lending terms.