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.”
