Coronavirus (COVID-19) mortgage update
The government has announced a series of temporary reforms for homeowners, including the ability to apply for a three-month mortgage payment holiday.
- Find out more: how to apply for a three-month mortgage payment holiday
- Find out more: what the coronavirus means for rent, mortgages, savings and borrowing
- Find out more: how will the coronavirus affect house prices?
You can find more of the latest updates and advice over on our dedicated Which? coronavirus information hub.
What is Help to Buy?
Help to Buy is the name given to a number of government schemes aimed at helping first-time buyers and home movers buy homes.
In England, the government's Help to Buy scheme has four main parts: Help to Buy equity loans, London Help to Buy, Help to Buy shared ownership (commonly shortened to 'shared ownership') and Help to Buy Isas.
In this guide, we give an overview of how each part of the Help to Buy scheme works. For more detailed information, you can visit our dedicated pages on each part of the Help to Buy scheme (linked to above).
Our video also gives a brief overview of how Help to Buy works.
Table: Help to Buy schemes at a glance
| Help to Buy scheme | Who's it for? | How does it work? |
|---|---|---|
| Help to Buy equity loan (England) | First-time buyers and home movers in England |
|
| London Help to Buy | First-time buyers and home movers in Greater London |
|
| Help to Buy Scotland | First-time buyers and home movers in Scotland |
|
| Help to Buy Wales | First-time buyers and home movers in Wales |
|
| Help to Buy Isa | First-time buyers (no longer open to new applicants) |
|
| Forces Help to Buy | Those serving in the armed forces who have completed a minimum length of service, have more than six months left to serve on application and meet certain medical categories |
|
| Help to Buy shared ownership | First-time buyers, existing shared ownership homeowners, and those who previously owned a home but can't afford one now |
|
Help to Buy equity loan (England)
Help to Buy equity loans provide a popular route into home ownership but are only available to people who want to buy a new-build property.
The home you're planning to purchase can be worth up to £600,000.
Help to Buy equity loans work like this:
Step 1: You put down a deposit of at least 5%.
Step 2: The government lends you up to 20% of the property's value as an equity loan.
Step 3: 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 take out a 75% mortgage).
After five years, you start paying interest on the government loan.
- Find out more: our full Help to Buy equity loans guide explains how the scheme works in England.
London Help to Buy equity loan
The London Help to Buy scheme works in the same way as Help to Buy equity loans in the rest of England - but buyers in London can borrow 40% of the property price from the government, rather than 20%.
This means Londoners participating in the scheme can buy a property with a mortgage of just 55% loan-to-value.
- Find out more: London Help to Buy guide
Help to Buy Scotland and Wales
Scotland and Wales each operate their own Help to Buy equity loan schemes, but no equivalent scheme is currently in operation in Northern Ireland.
Help to Buy Scotland offers equity loans of up to 15% on new-build homes priced up to £200,000.
Help to Buy Wales offers equity loans of up to 20% on new-build homes priced up to £300,000.
Help to Buy shared ownership
More commonly known simply as 'shared ownership', this scheme allows you to buy a share of a property and pay rent on the rest.
Usually, your share must be between 25% and 75% of the property price. A housing association will own the remaining share.
There are pros and cons to buying through shared ownership - read our guide to understand whether it could work for you.
- Find out more: shared ownership
Forces Help to Buy
People in the Armed Forces can borrow up to 50% of their salary interest-free to use for a property deposit and other buying costs, such as legal fees.
The maximum loan you can get is £25,000, which would need to be repaid 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.
Forces Help to Buy is currently scheduled to run until the end of 2019.
Help to Buy mortgage guarantee (no longer available)
This scheme, which closed to new applicants in December 2016, was designed to help those with small deposits buy a home.
It gave lenders a guarantee which covered them if borrowers defaulted on their mortgage payments, so that they could afford to offer 95% LTV mortgages but only face the risk of offering a 60% LTV mortgage.
The scheme was closed by Chancellor Philip Hammond, who said it was no longer necessary due to increasing numbers of lenders offering 90-95% mortgages independently of the scheme.
Help to Buy Isa (no longer open to new applicants)
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 bonus of £3,000. This is paid to your solicitor when you complete your property purchase.
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.
As of December 2019, Help to Buy Isas are no longer available to new applicants. If you have an existing account, you can continue to save (and benefit from the 25% bonus) until December 2030.
Find out more: Help to Buy Isa guide
