Help to Buy explained What is Help to Buy?
Understand the basics of Help to Buy in our two-minute video, then find out more below.
What is Help to Buy?
The Help to Buy scheme is designed to help people get on the property ladder or buy a new home without a large deposit. This government scheme has four parts: Help to Buy mortgage guarantees, Help to Buy equity loans, London Help to Buy and Help to Buy Isas.
In this guide, we give an overview of how each part of the Help to Buy scheme works. You can visit our dedicated pages on each part of the Help to Buy scheme for more detailed information.
- If you're hoping to get a mortgage using a Help to Buy scheme, we'd recommend talking to an impartial, whole-of-market broker. Which? Mortgage Advisers are independent experts who can help you find the right mortgage for your personal circumstances. You can call for a free initial consultation on 0808 252 7987.
Help to Buy scheme: do I qualify?
To be eligible for Help to Buy, you must:
- Have a deposit of at least 5%;
- Be looking to buy a home worth £600,000 or less (different limits apply for Help to Buy Isas);
- Be purchasing a property you intend to live in most of the time (ie not a property you intend to let out or use as a second home).
Help to Buy mortgage guarantee
Help to Buy mortgage guarantees can help home buyers unlock better mortgage rates. Most of the UK's biggest mortgage lenders have signed up to offer the guarantees, as well as smaller lenders.
The Help to Buy mortgage guarantee works like this:
- You put down a deposit of between 5% and 20%, and borrow the remainder from a mortgage lender
- The government will guarantee any mortgage borrowing above 80% of the property's value - for example, if you took out a 95% mortgage the government would guarantee to repay your lender up to 15% of its value if you defaulted
- The property can be old or new-build
- You don't have to be a first-time buyer to qualify
Find out more: Help to Buy mortgage guarantee guide
Help to Buy equity loan
Help to Buy equity loans are among the most popular routes into home ownership, and are only available to people who want to buy a new-build property.
Help to Buy equity loans work like this:
- You put down a deposit of at least 5%
- The government lends you up to 20% of the property's value as an equity loan
- You take out a mortgage on the rest of the property's value (so, if your deposit was 5% and your equity loan was 20%, you'd then take out a 75% mortgage)
Find out more: if you live in England, read our Help to Buy equity loan guide; alternatively check out Help to Buy (Wales) or Help to Buy (Scotland) (the latter is currently closed for applications but we'll update the page when the Scottish government announces its plans for the replacement scheme). Residents of Northern Ireland aren't eligible for Help to Buy equity loans.
London Help to Buy
This works in the same way as Help to Buy equity loans, but buyers in London can borrow 40% of the property price from the government rather than 20%.
Find out more: London Help to Buy guide
Help to Buy Isa
Help to Buy Isas are a type of tax-free savings account aimed specifically at people saving to buy their first home.
For every £200 contributed, the government will add an extra £50 towards buying your first home, up to a maximum of £3,000. This is paid to your solicitor when you're ready to move.
You can use Help to Buy Isa savings to purchase a home worth up to £250,000, or £450,000 if you're buying in London.
Find out more: Help to Buy Isa guide
Forces Help to Buy
If you're serving in the armed forces, Forces Help to Buy is a special part of the Help to Buy scheme which could help you to buy a property.
Through the scheme, servicemen and servicewomen can borrow up to 50% of their salary interest-free to use for a deposit and other buying costs such as legal fees.
The maximum loan you can get is £25,000, which you'd repay over 10 years.
To be eligible you must:
- have completed a minimum length of service
- have more than six months left to serve when you apply
- meet certain medical categories
To apply you will need to go through the Joint Personnel Administration system. Talk to your chain of command or personnel agency for more information.
- Last Updated: August 2016
- Updated by: Marie Kemplay
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