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Help to Buy

24th January 2022


Getting onto the housing ladder is an aspiration for most people, but just reaching the first rung can be a challenge.
As well as qualifying for a mortgage, you will also need to save up for a deposit, which can seem like a daunting task.
However, there is support available in the form of the aptly-named Help to Buy scheme.
This straightforward guide will answer all your questions about Help to Buy and give you the confidence to decide whether it is right for you.

What is Help to Buy?

Help to Buy was launched in 2013 to give people frozen out of the property market a helping hand with their deposit.
A new version of the Help to Buy scheme opened on April 1 2021. And gives first-time buyers – and home movers in Wales, an equity loan from the government towards the deposit on a new build home.
An equity loan is linked to the value of your home, so if your property increases in value, your outstanding balance on your equity loan will rise too.
There is a handy calculator here.

How long have I got to apply for a Help to Buy loan?

The current version of the Help to Buy: Equity Loan will end on 31 March 2023, but it’s likely that applications for this will close much sooner. 
It is available in England, and there is a similar offering in Wales where home movers are also eligible. The schemes in Scotland and Northern Ireland have closed to new applicants.
Another scheme in Scotland which offers Help to Buy loans for homes built by smaller developers is open until the end of the 2021/22 financial year.
If you are in Scotland, you may qualify for other support to buy a home - find out more here.

How does the Help to Buy: Equity Loan scheme work?

If you are a first-time buyer in England or Wales, you can get an equity loan towards the cost of a new build home, with certain conditions attached. 
You need to have a deposit of at least 5% of the property value and then you can borrow between 5% and 20% (or 40% in London) of the full purchase price. The remaining amount is covered by a mortgage, which you apply for in the usual way from lenders including TSB and involves standard credit and affordability checks. Find out more about TSB mortgages here. 18+ and UK resident only. Subject to status and lending criteria.  Your home may be repossessed if you do not keep up repayments on your mortgage. 

What costs are involved in taking out a Help to Buy loan?

The loan is interest free for the first five years and you pay a monthly management fee of £1. In year six, interest kicks in at 1.75%, plus the management fee. The interest rate will rise each April by the Consumer Price Index (CPI), plus 2%. 
This means the longer you leave repaying the equity loan, the more expensive it gets. Also, these payments are interest only, so you do not reduce the amount you owe, and you must continue to make them until you repay your loan in full.

How long do I have to repay the Help to Buy loan?

You can repay all or part of your equity loan at any time, but a part payment must be at least 10% of what your home is worth at the time. 
The equity loan has to be paid off in full at the end of the loan term, when you pay off your repayment mortgage, when you sell your home or if you do not follow the terms set out in the loan contract.
And remember that the amount you will have to pay is linked to the value of your home at the time you make the repayment.
For example:
Purchase price of home: £200,000
10% Help to Buy equity loan: £20,000
Value of home when Help to Buy loan is repaid: £250,000
10% Help to Buy equity loan to be repaid: £25,000
The amount you pay back will almost certainly be different to your original loan because it is worked out as a percentage of the market value of the property at the time you choose to repay. If the market value of your home rises, so does the amount you owe – but equally, if the value of your home falls, the amount of loan you need to repay falls too.
For example:
Purchase price of home: £200,000
10% Help to Buy equity loan: £20,000
Value of home when Help to Buy loan is repaid: £175,000
10% Help to Buy equity loan to be repaid: £17,500

Who is eligible for Help to Buy?

You must be a first-time buyer in England or Wales, aged 18 or over, and able to afford the fees and interest payments. The scheme is also open to home movers in Wales.
You can apply on your own or with other people, but all applicants must meet the eligibility criteria. Anyone who is married, in a civil partnership or in a cohabiting relationship will have to make a joint application with their partner – where both partners will need to be first time buyers in England.

Are there restrictions on the type of property I can get with Help to Buy?

Help to Buy can only be used to purchase a new build residential property, sold by a Help to Buy registered homebuilder. It must be the only home you own and live in. 
There’s also a maximum property purchase price which is set by region, ranging from £186,100 in the North East of England to £600,000 in London. For Wales the maximum property purchase is £250,000.
For more information about limits in your area, click here.

For other types of property, the government’s Mortgage Guarantee Scheme may be suitable. This helps buyers with a 5% deposit, by guaranteeing 15% of a 95% loan. This means lenders will be able to offer similar mortgage deals to buyers with a 5% deposit as a 20% deposit. For more info, click here.


Are Help to Buy mortgages more expensive than other types?

Not usually. The mortgage you apply for is the same as a normal one. But remember that this scheme means taking out two loans – the equity loan and the mortgage – and there are costs attached to both parts. Some lenders may charge a premium for mortgages if you have an equity loan.

Is the loan going to work out more expensive in the long run?

If you manage to pay off the equity loan within the first five years, you won’t pay a penny of interest, just the £12 a year management fee. The loan is also linked to the market value of your home so if there’s a drop in house prices, your loan reduces in proportion, while a rise in prices sees the government stake in your house rise in value. But your interest payments remain linked to the original loan amount. 
You will need a plan to repay the equity loan if you don’t sell the house in future.

Are Help to Buy houses overpriced?

While you are restricted to new build properties being sold by Help to Buy registered housebuilders, the latest version of the scheme brought in regional price caps. 

Can I get a Help to Buy loan if I have a bad credit history?

Yes, but you might have difficulty obtaining the mortgage you need for the remaining costs. These are assessed by the lender like any other mortgage application and are subject to the usual credit and affordability checks.

Can I get help saving for my deposit with a Help to Buy or Lifetime ISA?

The Help to Buy ISA scheme has closed to new applicants but anyone who has an existing account can continue to save into it until December 2030. 
But you can still start saving with a Lifetime ISA, which can be used for a first home deposit or to save for later life.
You must be aged between 18 and 39 when you open a Lifetime ISA, and you can save up to £4,000 a year, which the government tops up with a 25% bonus, up to £1,000 a year. You can use the money for a deposit on your first home.
For more information about ISAs, click here.


18+ and UK resident only. Subject to status and lending criteria.
Your home may be repossessed if you do not keep up repayments on your mortgage.