The current Help to Buy scheme runs until March 2023 and is available to first time buyers in England only.
The Help to Buy: ISA has been discontinued, with the Help to Buy: Equity Loan as the sole option. The equity loan is a loan from the government that you put towards the cost of buying a new-build home. The amount you can borrow is between 5-20% (up to 40% if you’re buying in London) of the property’s purchase price.
Interest on your equity loan will start after five years. You can repay some or all of your equity loan at any time.
The Scottish and Welsh Help to Buy schemes work slightly differently. In Scotland, you can get a 15% equity loan on a new-build home up to the value of £200,000. You’ll pay no interest on the loan for the lifetime of the mortgage.
In Wales, the maximum equity loan is 20% on new-builds up worth up to £300,000. Like England, interest starts after five years. You won’t be able to get Help to Buy if you’re in Northern Ireland.
How much you’ll pay for your Help to Buy home depends on what part of the country you’re buying it.
|Area||Maximum home price|
|Yorkshire and the Humber||£228,100|
|East of England||£407,400|
The total cost of buying your new home is the equity loan, your own deposit, and your remaining mortgage.
It’s important to look at your options and see if a Help to Buy equity loan is right for you.
Years 1-5, you’ll pay:
No interest on your equity loan
£1 a month management fee by Direct Debit
From year 6, you’ll pay:
£1 a month management fee by Direct Debit
Monthly interest fee at 1.75% of your equity loan
The interest rate will then rise every April, plus 2% interest until the equity loan is repaid in full
When taking out the equity loan, you’ll need to agree to pay it back in full (with interest and management fees on top).
You’ll have to repay it:
at the end of the equity loan term
when you pay off your mortgage
when you sell your home
The amount of equity loan you pay back will be worked out as a percentage of what your home is worth at the time. If the price of your home has gone up, then so will the loan amount you’ll need to pay. If the value has fallen, the amount you’ll pay on the loan will too.
To qualify for Help to Buy, you’ll need to meet the following criteria:
You’re a genuine first time buyer
The home you want needs to be within the price cap for your region
Anyone else named on the mortgage can’t have owned a home in the UK or abroad
You don’t have any existing sharia mortgage finance
Your eligibility will be thoroughly checked, along with your affordability. You’ll also need to sign a legal form declaring that you’re a genuine first time buyer. Read more in our Guide: What Mortgage Lenders Look for in Mortgage Applicants.
Help to Buy is a useful option for first time buyers who otherwise wouldn’t be able to get on the property ladder. The good thing about an equity loan to buy your first home is that you won’t need to borrow as much on a mortgage. That means you could get cheaper rates than if you were otherwise taking out a 95% LTV mortgage.
The scheme has enabled over 200,000 people in the UK to buy a home, but it’s not without its critics. It’s been suggested that it mainly benefits housing developers, as opposed to home buyers.
Be mindful that a lot of good mortgage deals aren’t accessible to you if you’re using Help to Buy. It’s still possible to get a good rate, you might just need some advice from a mortgage broker who has experience with Help to Buy.
You can read more about the benefits of working with a broker in our Guide: 6 Reasons Why You Should Use a Mortgage Broker.
Help to Buy advantages
You don't need a big deposit
LTV is lower so you can get a better mortgage rate
There’s no interest on the equity loan for five years
After five years you'll pay a competitive rate of 1.75% on your loan
Repay your loan when you like
Help to Buy disadvantages
Your loan is a percentage of your home's value, so the amount you’ll pay back can go up as well as down
Not all lenders offer Help to Buy mortgages
Remortgaging can be difficult
You can only buy a new-build home from a participating developer
You need permission to make improvements to your home, even though you own it
Read more on the government Help to Buy website to see if it's right for you.
Before applying, you'll need to find your local Help to Buy agent.
You should also check you can afford the following:
Up to £500 as a fee to reserve your home
A deposit of at least 5% of the property price
Other fees (stamp duty, solicitor fees and mortgage broker fees)
The monthly mortgage repayments
It’s always a good idea to talk to a specialist mortgage advisor before applying for a Help to Buy mortgage. An advisor will look at your situation and explain your options clearly. They’ll also check if Help to Buy is right for you.
It’s especially important to get advice if you have other factors such as bad credit or a complex income. The brokers we work with have seen it all, and aren’t judgemental. Make an enquiry and get matched to your ideal Help to Buy mortgage broker.
Over 50% of mortgages for people who are self-employed or have bad credit aren’t available directly to you. They’re only available through specialist brokers. Using our platform guarantees you’ll be matched with a broker who has a proven track record of making mortgages possible for people like you. Less processing, more understanding.
Applying for a mortgage or understanding your options shouldn't be confusing, yet there are just so many myths doing the rounds and it's not easy to know where to turn to get the right advice.
Our calculators give you an idea of what you might be able to borrow, what's affordable and a rough estimate of the kind of property prices you can start to look at.