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What is Help to Buy?

The Help to Buy scheme is a government-backed initiative designed to help people get on the property ladder or buy a new home without a large deposit. 

In this article
What is Help to Buy? Table: Help to Buy schemes at a glance Help to Buy equity loans (England) London Help to Buy equity loan
Help to Buy around the UK Help to Buy shared ownership Forces Help to Buy Help to Buy Isa (no longer open to new applicants)

What is Help to Buy?

Help to Buy is the name given to a number of government schemes aimed at helping first-time buyers get on to the property ladder.

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 known simply as 'shared ownership') and Help to Buy Isas (no longer available to new applicants). 

In this guide, we give an overview of how each part of the Help to Buy scheme 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 in England
  • Equity loan of up to 20% on participating new-build properties
  • Limited to first-time buyers
  • Regional price caps
London Help to Buy First-time buyers in Greater London
  • Equity loan of up to 40% on participating new-build properties
  • £600,000 maximum property value
  • Limited to first-time buyers
Help to Buy Wales First-time buyers and home movers in Wales
  • Equity loan of up to 20% on participating new-build properties
  • £250,000 maximum property value
Help to Buy Isa First-time buyers (no longer open to new applicants)
  • Can pay in maximum £1,200 initial deposit, then £200 per month thereafter
  • Get a government bonus of 25% when you buy your first home (maximum bonus £3,000)
  • £450,000 maximum property value in London; £250,000 maximum property value in the rest of the UK
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
  • Borrow up to 50% of your salary interest-free
  • £25,000 maximum loan, to be repaid over 10 years
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
  • You buy a 25-75% share of a property and pay rent on the remaining share

Help to Buy equity loans (England)

Help to Buy equity loans provide a popular route into homeownership but are now only available to first-time buyers purchasing a new-build property

How much the property can cost depends on where you're buying, as regional price caps are in place. These range from £186,100 in the North East of England to £600,000 in London.

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.

 

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 first-time 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.

Help to Buy around the UK

Help to Buy Wales offers equity loans of up to 20% on new-build homes priced up to £250,000.

Help to Buy Scotland closed for applications in February 2021, and no equivalent scheme currently exists in Northern Ireland.

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.

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 needs 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 2022.

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 adds 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.

Help to Buy Isas closed to new applicants at the end of 2019. If you have an existing account, you can continue to save (and benefit from the 25% bonus) until December 2030.

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