What is Help to Buy?
Help to Buy is the name given to a number of government schemes aimed to help people 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 (more commonly just referred to as 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 the Help to Buy scheme works.
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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.
The home you're planning to purchase must be worth less than £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 then take out a 75% mortgage).
After five years, you'll need to start paying interest on the government loan.
- Find out more: our full Help to Buy equity loan 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 - but buyers in London can borrow 40% of the property price from the government rather than 20%.
This allows them to buy a property with a mortgage of just 55% loan-to-value ratio.
- Find out more: London Help to Buy guide
Help to Buy Wales and Help to Buy Scotland
Scotland and Wales each operate their own Help to Buy schemes, but no equivalent scheme is currently in operation in Northern Ireland.
Help to Buy Wales offers equity loans of up to 20% on new-build homes priced up to £300,000.
Help to Buy Scotland, meanwhile, allows equity loans of up to 15% on new-build homes priced up to £200,000.
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 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. You need to be a first-time buyer to be eligible.
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 that could help you to buy a property.
Through the scheme, people in the services 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.
Forces Help to Buy is scheduled to run until the end of 2018.
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