Young family being shown around a new home

Who is eligible for Help to Buy?

author: Sarah Beresford

By Sarah Beresford

If you’re finding it hard to save enough deposit to get a mortgage, then the Help to Buy scheme could be what you need. We’ve looked at the pros and cons.

How does the Help to Buy scheme work? 

Help to Buy is a government scheme that was launched to help get first-time buyers on the property ladder. It works by letting you take out an equity loan for up to 20% of the property value, or 40% if it’s in London. A 20% equity loan along with a 5% deposit means that it’s easier to get mortgages, as you only need to borrow 75% of the property value. This makes it particularly helpful for those struggling to save a large deposit. 

The equity loan is interest-free for the first five years, after which you start to make interest payments. The loan has to be repaid in full when you come to sell your property or the mortgage comes to an end. 

This Help to Buy equity loan scheme is different from the Help to Buy ISA, which has now been replaced by the Lifetime ISA. 

Is the Help to Buy scheme still available? 

The original Help to Buy scheme began in 2013 and was open to anyone looking to buy a new-build home, just as long as it would be the only home they owned. It recently changed in April 2021, so that only first-time buyers are now eligible. 

To be eligible for the new scheme you must: 

  • be over 18 
  • be buying a new-build property 
  • have never owned a property, or any land, before 
  • make sure the property value doesn’t exceed the property cap for the area 
  • never have had any form of Sharia mortgage. 

All of the above must also apply to anyone you are applying with. 

When does Help to Buy end? 

The current Help to Buy scheme is due to end on 31st March, 2023. 

Is Help to Buy worth it? 

If your goal is to get on the property ladder but you’re struggling to save up enough for a deposit, then the Help to Buy scheme is certainly worth considering. To help you make an informed decision, it’s worth weighing up the pros and cons first: 


You don’t need as much of a deposit 

Help to Buy can be a good option for those finding it hard to save enough money for a large deposit because the government loan increases what you can put down.  

It’s interest-free 

You don’t pay any interest on the loan for the first five years, although you do pay a £1 monthly fee from the start. 

Flexible payback options 

You can choose to pay all or part of the equity back at any time (a minimum of 10% applies). Be aware if you do this you’ll have to pay fees to have the property valued. 

Greater choice of mortgage 

Because the government is lending you a share of the property value, you can apply for a smaller mortgage with a lower loan-to-value. This means more lenders may open up to you with better deals. 


The rate of interest increases 

After five years, you’ll start to be charged interest on the equity loan at 1.75%. This will increase every year according to the consumer price index, plus 2%. 

The amount you owe can go up 

Because the equity loan is based on a percentage value of the property, if your home increases in value then so does the amount you owe. For example, say you originally bought a home for £200,000 and took out a 20% equity loan of £40,000. Now your home is worth £240,000 so the amount of the equity loan is £48,000 (20% of the new value). 

Note you’ll only ever pay interest on the original amount borrowed regardless of any increase in value. 

It’s restricted to new-builds only 

If you’ve got your heart set on a character-rich property then this might not be the scheme for you as it’s only available on new-build properties. 

Is Help to Buy only for new builds? 

Yes, this scheme is only available for new builds, and the home builder must also be signed up for the scheme.  

The new Help to Buy scheme has introduced price caps, meaning the value of your property must be below a certain level: 

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

How to apply for Help to Buy 

You’ll need to contact a Help to Buy agent in the area you want to move to. Find an agent for your area on the government website 

If you find a property you want to buy, you’ll also have to pay a £500 reservation fee (which is refundable if it turns out that you’re not eligible for the equity loan). Before applying, make sure you have enough to cover a 5% deposit as well as legal fees, mortgage fees, and removal fees.  

The steps for applying are as follows: 

  • find a property that’s eligible for the new build scheme 
  • pay the reservation fee 
  • complete a Property Information form 
  • if approved you’ll receive an Authority to Proceed, which lasts 3 months 
  • at this point, you submit your mortgage application and proceed with surveys as usual. 

Read on to find out about the mortgage guarantee scheme. 

Disclaimer: We make every effort to ensure that content is correct at the time of publication. Please note that information published on this website does not constitute financial advice, and we aren’t responsible for the content of any external sites.

Young family being shown around a new home Young family being shown around a new home