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What Is Help To Buy And How Does Help To Buy Work?

What Is Help To Buy And How Does Help To Buy Work?

By Miranda Harding
Published 16 August 2022

Help to Buy is a government's scheme to help first time buyers buy a home. Read about the Help to Buy scheme in our guide.

In this guide

What is Help to Buy?

Help to Buy is a government scheme designed to give first time buyers financial help onto the property ladder. The scheme gives a loan to the buyer, which acts as an additional deposit. 

 Don’t get this confused with the Help to Buy ISA! That’s a savings scheme set up by the government.


The Help to Buy scheme is ending soon!

The Help to Buy Equity Loan closes on 31 March 2023 and closes to new applications on 31 October 2022. To be eligible for an equity loan, you must legally complete by 31 March 2023 and you’re expected to have the keys to your home by 6pm.

Who can use Help to Buy?

Only first time buyers are eligible for the scheme - so if you’re looking to buy with a partner who has previously owned a property, you won’t be able to use Help to Buy. 

Help to Buy specifically operates in England - but there are similar schemes in Wales and Scotland.

How does Help to Buy work?

Help to Buy is an equity loan that is leant to the buyer to top up their existing house deposit. The government will lend the buyer up to 20% of the property’s value (40% in London). The remainder of the property price is bought with a repayment mortgage.

Criteria for the Help to Buy scheme

  • The buyer needs a 5% deposit
  • The buyer still needs to get a mortgage. You'll still need to follow the usual mortgage process if you're using Help to Buy
  • The buyer must live in the property. You can't purchase a second home or a buy to let with Help to Buy.
  • There is a property price limit. Depending on where you want to buy, there is a maximum purchase price for Help to Buy properties.

How does the equity loan work exactly?

The equity loan is the ‘boost’ provided by the government to increase the buyer’s downpayment on the property. The buyer has to pay this loan back to the government over time.

1. The equity loan repayments are interest free for the first five years of the mortgage. That means the buyer only pays back capital payments on the loan in the first five years

2. After five years, the buyer will be charged interest on the loan amount. The initial rate of interest is 1.75%, which increases every by 2% and in line with the Consumer Prices Index each April.

It's important to remember that you need a mortgage for the remaining price of the property! That's where Tembo comes in. We'll organise your mortgage for you alongside the Help to Buy equity loan.


Kirsty White

Tembo mortgage lead

Let’s say you wanted to buy a £400,000 property. You’ll need to have at least a 5% deposit (so, you have £20,000 saved. With Help to Buy you can borrow an equity loan worth 20% of the property price - so that’s £80,000 loaned to you from the government. Adding together your deposit and the equity loan, gives you a downpayment on the property of £100,000. This means you will need to get a mortgage of £300,000.

How the Help to Buy scheme works

How the Help to Buy scheme works

How does location impact Help to Buy?

There are different price caps on the property you can buy, depending on location.

  • London: £600,000
  • South East: £437,600
  • East of England: £407,400
  • South West: £349,000
  • East Midlands: £261,900
  • West Midlands: £255,600
  • Yorkshire and The Humber: £228,100
  • North West: £224,400
  • North East: £186,100

There are restrictions on the type of property you can buy with Help to Buy

You can only purchase new build homes with the Help to Buy schemes.

Pros of Help to Buy

You can usually get a lower interest rate on your residential mortgage, as the Help to Buy equity loan acts as an additional deposit.

You don’t have to save for a deposit for as long with the Help to Buy equity loan.

You don’t have to pay off the equity loan immediately - however the interest will rise on the loan after 5 years.

Cons of Help to Buy

You're limited in terms of the type of property you can buy. Help to Buy homes are only new builds.

The interest rises on the equity loan after five years, and if you are still paying off the loan beyond 10 years, the repayments could end up costing more than the standard mortgage.

The equity loan repayments aren’t fixed. This means that if your property price changes or increases, you’ll owe more when paying the loan back. An equity loan is essentially the stake that the government owns in your home - this means that if the price of the property changes, so does their stake in your home. 

You have to have permission to do any renovations to the property.

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