Help To Buy Explained

Help to Buy

Help to Buy was available in England until March 31st, 2023. It was designed to help first-time buyers get a foot on the property ladder by allowing them to purchase a new-build home with a low deposit and also using a low-interest equity loan to bridge the gap between the deposit and mortgage required.

Help to Buy in Scotland and Wales

Help to Buy is currently no longer available in Scotland.

In Wales, the maximum equity loan is 20% on new-builds worth up to £300,000. The equity loan is interest free for the first five years. The Help to Buy scheme is available in Wales until March 2025.

Help to Buy is not available in Northern Ireland.

Regional price caps for Help to Buy

The regional price caps for the Help to Buy scheme in England were as follows:

Help to Buy equity loan

The Help to Buy equity loan is no longer available in England as the scheme closed to new applicants on March 31st, 2023. The repayment terms on the loan work as follows:

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

The full repayment terms on the equity loan are as follows:

• 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.

Help to Buy eligibility

Help to Buy eligibility was as follows:

• 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

What were the pros and cons of Help to Buy?

Help to Buy was a useful option for first time buyers who otherwise wouldn’t be able to get on the property ladder.

The scheme enabled over 200,000 people in the UK to buy a home, but it’s not been without its critics, with suggestions that it mainly benefited housing developers, as opposed to home buyers.

Help to Buy advantages

• Low deposit

• Low loan-to-value so you could get a more competitive rate

• 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 offered Help to Buy mortgages

• Remortgaging can be difficult

• Only new-build homes were available from participating developers

• You need permission to make improvements to your home, even though you own it 

How to apply for Help to Buy

The Help to Buy scheme is currently no longer available in either England or Scotland. It is still available in Wales until March 2025.