Help to Buy scheme: everything you need to know

Help to Buy is a government scheme which can help first time home buyers get a property with just a 5% deposit. Use this guide to learn how Help to Buy schemes work, how to qualify and the different options available.

How does Help to Buy work?

Use our Mortgage calculator, to work out how much you’d pay back each month.

There are two ways you can benefit from the Help to Buy scheme:

  • Equity loans - where the government lends first-time buyers and existing homeowners’ money to buy a newly-built home.
  • Mortgage guarantee - where the government promises your lender that it will cover part of any losses they might sustain as a result of the mortgage not being repaid. This is available for new and old properties across the UK and will close to new loans on 31 December 2016.

Who can’t apply for the scheme?

  • You can’t use the above schemes to buy a second home or a property to rent out.
  • If you use Help to Buy, you can only take out a repayment mortgage.
  • You can’t buy a property for more than the set price limits (see below).
Use our Mortgage Affordability Calculator to work out your monthly repayments and whether you can meet them.

National differences

  • In England, both schemes apply to homes costing up to £600,000.
  • In Northern Ireland the mortgage guarantee scheme applies to homes costing up to £600,000. There is also a different equity loans scheme (link below).
  • In Scotland the maximum threshold depends on the value of the property and when your application is completed. For example, for applications completed on or before 31 March 2017, the maximum purchase price can’t exceed £230,000.
  • In Wales, both schemes apply to homes costing up to £300,000.
Northern Ireland has a different equity sharing scheme called Co-Ownership.

Help to Buy: Equity loans

How they work

  • You need at least 5% of the sale price of your new-build flat or house as a deposit.
  • The government lends you up to 20% of the sale price.
  • You borrow the rest (up to 75%) from a mortgage lender, on a repayment basis.


Cost of home - £200,000

Cost name Percentage of total £ value
Your deposit 5% £10,000
Equity loan 20% £40,000
Mortgage 75% £150,000
TOTAL   £200,000

The interest rate you will be charged

You don’t pay any interest or fees on the government’s equity loan for the first five years. In the sixth year, you’ll be charged 1.75%.

After that, the fee rises by inflation based on the Retail Prices Index (RPI) plus 1% each year.

RPI figures are put together by the Office for National Statistics.

See below for an example of how the fees work.

Interest rates for paying back your loan

Years 1-5: no fees
Year 6: 1.75% of the loan
Year 7 onwards: 1.75% + RPI + 1%
These fees do not go towards paying off the government loan.

When you sell your home, or the mortgage is paid off, you have to repay the equity loan plus a share of any increase in the value. It works like this:


Home bought for £200,000, sold for £250,000

Increase in value 25%
Equity loan repayment £50,000 (£40,000 + 25% profit)
Mortgage £150,000 (less capital repayments)
Your share at least £50,000

The remaining £50,000 (or more) can be used a deposit on your next home.

The exact amount depends on how much you’ve paid off your mortgage.

You can also pay back part or all of your loan at any time.

The minimum percentage you can pay back is 10% of the market value of your home.

The amount you pay will depend on the market value at that time.

How do I find an equity loan?

Speak to the Help to Buy agent in your local area or a local developer who is registered with Help to Buy.

Help to Buy: Mortgage guarantees

The Mortgage Guarantee Scheme closed to new loans as of 31 December 2016.

How they work

These are government-backed mortgages.

The aim is that the guarantee will encourage the lender to give you a mortgage which only requires a small deposit.

Mortgage guarantees are for:

  • People living in England, Wales, Scotland and Northern Ireland.
  • Buyers with a deposit of at least 5% of the purchase price.
  • First-time buyers and existing homeowners who are moving.
  • New or old properties selling for up to £600,000.

They are not for:

  • Second homes
  • Properties you intend to rent out
  • Anyone who is using or going to use another home buying scheme

How do I get a mortgage guarantee?

Most major lenders offer mortgages under the Help to Buy guarantee scheme.

Be aware that the lender will check you can afford mortgage repayments.

You’re still responsible for making repayments backed by a mortgage guarantee in exactly the same way as as any other mortgage.

Using a mortgage guarantee for remortgaging

If your home’s value has dropped or if you owe your existing mortgage lender 95% of the cost of the value, a few lenders are offering mortgage guarantees to those looking to remortgage.

Where to go for more information

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