Help to Buy

What is Help to Buy?

Help to Buy is a government-backed scheme available to both first-time buyers and existing homeowners looking to buy a new home. The scheme allows homebuyers to secure a new home with just a 5% cash deposit.

How does the scheme work?

With the Help to Buy Equity Loan scheme, the government lends you up to 20% of the cost of your newly built home through an equity loan, which allows you to secure a new home with just a 5% cash deposit and a 75% mortgage to make up the rest. This equity loan only applies to new-build properties worth up to £600,000 in England. The 20% government fund combined with your 5% deposit will allow you to access better mortgage rates. The remaining 75% is then funded by your mortgage, this will either be supplied by a bank or building society.

For the first five years, you will pay an initial monthly management fee of £1. This continues until the loan is repaid. In the sixth year, you will be required to pay an interest fee of 1.75% per annum on the outstanding amount of the equity loan. After then, this fee will increase each year by the increase (if any) in the Retail Prices Index (RPI) plus 1%. The management fee and interest fees are not capital repayments to your Homes England equity loan – they do not reduce the amount owing.

The equity loan must be repaid after 25 years, or earlier if you sell your home. You must repay the same percentage of the proceeds of the sale to Homes England as the initial equity loan (ie. If you received an equity loan for 20% of the purchase price of your home, you must repay 20% of the proceeds of the future sale).

The property purchased must be your only residence. Help to Buy is not available to assist buy-to-let investors or those who will own any property other than their Help to Buy property after completing their purchase. You cannot rent out your existing home and buy a second home through Help to Buy.

For more information on the Help to Buy scheme, refer to the Help to Buy website: https://www.helptobuy.gov.uk/equity-loan/equity-loans/