Introduction to the Help to Buy Scheme
If you’re researching government-backed mortgage schemes, you’ve likely come across the now-closed Help to Buy Equity Loan scheme. This government scheme was designed to make homeownership more accessible. While no longer available to new applicants, thousands of first-time buyers used Help to Buy to step onto the property ladder.
The Help to Buy Equity Loan scheme allowed eligible buyers to purchase a new build home with just a 5% deposit, with the government providing an equity loan of up to 20% of the property’s value (or 40% in London). This reduced the upfront cost and made it easier for buyers to secure a mortgage.
In addition to the equity loan, other government initiatives like the Mortgage Guarantee Scheme and the Lifetime ISA were introduced to help first time buyers access competitive mortgages and save towards deposits.
When Did Help to Buy Start?
Launched in April 2013 by the UK Government, the Help to Buy Equity Loan scheme aimed to support buyers—especially first-time buyers—by offering a way to purchase a new-build property with a low deposit and reduced borrowing.
Key Features at Launch:
- Open to both first-time buyers and home movers (until 2021).
- 5% deposit required.
- Government equity loan up to 20% (40% in London).
- Available for new build houses and flats.
- Remaining balance covered by a mortgage.
Eligibility Criteria
To qualify in England, you had to be a first time buyer purchasing a new build home from a registered developer, and stay under the regional price cap. In Scotland and Wales, you didn’t need to be a first time buyer, but couldn’t own another property at the time of purchase. Buy-to-let purchases were not allowed.
You also had to demonstrate affordability and meet credit requirements set by the lender.
How the Help to Buy Equity Loan Scheme Worked
Buyers received an equity loan from the government, which meant they only needed a 5% deposit. The equity loan covered up to 20% (or 40% in London), reducing the size of the required mortgage. The equity loan was interest-free for the first five years.
Available for properties up to £600,000 in England, the scheme helped over 200,000 first-time buyers before ending in March 2023.
Help to Buy Mortgage Options
Many mainstream lenders participated in Help to Buy. Buyers often used a mortgage broker to find the best deals. Alongside the equity loan, some buyers used a Lifetime ISA for extra deposit savings, benefiting from a 25% government bonus.
Regional Variations
The scheme adapted to local market conditions. In London, the equity loan limit was 40%. In Scotland, it was 15%. Property price caps also varied regionally to ensure the scheme remained useful across the UK.
Help to Buy Benefits
- Just 5% deposit needed.
- Government equity loan reduced mortgage borrowing.
- No interest on the loan for 5 years.
- Access to higher-value homes.
- Supported housebuilding by focusing on new builds.
When Did the Help to Buy Scheme End?
- December 2020: Home movers excluded.
- October 31, 2022: Final applications accepted.
- March 31, 2023: Scheme fully closed.
Those who already used the scheme still need to repay their equity loan, typically when they sell the home, remortgage, or at the end of the loan term.
When & How the Help to Buy Loan Must Be Repaid
The equity loan must be repaid under the following conditions:
- After 25 years
- When selling the property
- When repaying the mortgage in full
- If remortgaging without government consent
You repay the same percentage borrowed—not the original amount. For example, a 20% loan on a £200,000 home (£40,000) would be £50,000 if the home sells for £250,000.
Help to Buy Interest Breakdown
- Years 1–5: Interest-free
- From year 6: Interest charged at 1.75% and increases each year based on RPI + 1%
- £1/month management fee throughout the loan
Steps to Repay Your Help to Buy Loan
- Get a property valuation by an RICS-registered surveyor (valid for 3 months).
- Request a redemption quote via the Target HCA portal.
- Instruct a solicitor to manage the legal work.
- Repay using savings, remortgage funds, or sale proceeds.
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Who Participated in the Help to Buy Scheme
| Lender | Help to Buy Participation | Notes |
|---|---|---|
| Barclays | Yes | Offered nationwide |
| Halifax | Yes | One of the main HTB providers |
| NatWest | Yes | Competitive HTB deals |
| Nationwide | Yes | Flexible lending criteria |
| Santander | Yes | 75% mortgages with HTB |
| Leeds BS | Yes | Focused on new builds |
| Virgin Money | Yes | Exclusive first-time buyer deals |
| HSBC | No | Did not participate |
Alternatives Now That Help to Buy Has Ended
- First Homes Scheme: 30–50% discount on new builds for locals and key workers
- Shared Ownership: Buy a share, rent the rest
- Mortgage Guarantee: 95% LTV mortgages (ends June 2025)
- Lifetime ISA: Save with a 25% government bonus
- Right to Buy: Discounts for council tenants
Get the Right Advice When Navigating Help to Buy Repayments
The Help to Buy scheme gave many a chance at homeownership, but understanding repayment options is essential. From interest changes to property valuations, expert guidance ensures you’re making informed decisions.
Speak to a mortgage broker: Call 01332 470400 or complete the enquiry form to get expert advice tailored to your Help to Buy loan or repayment situation.
Why Work with Option Finance for Bad Credit Mortgages?
At Option Finance, we specialise in mortgages for complex credit scenarios. Our team works with all major bad credit lenders and has access to exclusive deals that aren’t available on the high street.
Understanding one’s credit report from a credit reference agency can help in securing a mortgage.
Over 20 years of experience
Full market access to specialist lenders
Fast, honest, and personalised mortgage advice
Expert help with complex or recent credit issues
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Jonathan, 27 Jan 2025
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FAQs
Can I remortgage if I still have a Help to Buy equity loan?
Yes, but you’ll need government approval first. Some lenders may restrict options unless you repay the equity loan as part of the remortgage.
What happens if I want to sell my home?
You must repay the equity loan when you sell. The repayment is based on the current market value—not the original amount borrowed.
Can I repay just part of the equity loan?
Yes. This is known as a partial repayment or “staircasing.” You must get a valuation and follow the formal repayment process via the Target portal.
Do I pay tax on the Help to Buy equity loan?
No. The equity loan isn’t taxed, and you don’t pay capital gains tax on your main residence. However, you do pay interest and management fees.
Are there still 5% deposit mortgage options now that Help to Buy has ended?
Yes. The Mortgage Guarantee Scheme is still active and supports 95% mortgages through participating lenders until June 2025.
Ready to Take the First Step?
Whether you’re a first-time buyer, remortgaging, or moving home, bad credit doesn’t have to hold you back.
Understanding credit scoring can help you prepare for a mortgage application. You can speak to one of our specialist mortgage brokers who would be able to guide you through the process. They will advise if there is a lender available and the maximum loan amount based on your circumstances. We are a whole of market mortgage brokerage with access to all lenders.
