Help to Buy scheme:
Everything you need to know

Whether you’re a first-time buyer or a property ladder veteran, the UK government’s Help to Buy scheme benefits everyone.

What is Help to Buy?

Help to Buy was started by the British government as a scheme to help first time buyers in England get a home with only a 5% deposit. As a result, thousands of buyers across the country can start their journey on the property ladder, rather than being stuck in the cycle of renting. We’ve put together a guide on everything you need to know about Help to Buy, including how to find out if your eligible, how you can apply, and roughly how much you might be able to get in equity loans.

How does Help to Buy work?

First and foremost, a quick explanation of equity loans. In the UK, an equity loan is additional borrowing secured as a top-up to the amount a home owner/buyer can borrow from a main mortgage provider. The UK government uses equity loans as part of their Help to Buy schemes to assist buyers looking for a home, who would otherwise be unable to purchase with an ordinary main mortgage.

Help to Buy: ISA

Also worth going into quickly is Help to Buy: ISA, which is specifically geared towards first-time buyers starting out on the property ladder. If you are saving to purchase your first home, seriously consider saving into a Help to Buy: ISA, because the Government will increase your savings by 25%. This means that for every £200 you save, the Government will give you a bonus of £50. The maximum bonus you can get from the Government is £3,000.

The schemes

The Government’s Help to Buy schemes offer home buyers either a Shared Ownership plan, or the aforementioned equity loan to help them purchase a newly built home. For first-time buyers using Help to Buy: ISA, the maximum house price you can get is £250,000 or less (£450,000 or less in London). Alternatively, if you aren’t using the Help to Buy: ISA, you can get a home with a value up to £600,000, though only if you’re using the Government’s equity loans.

Be aware that after March 2023, Help to Buy will only cover first-time buyers and NOT home buyers with an existing home. Additionally, from April 2021 the Government will introduce new regional caps (see below).

Help to Buy regional differences

The amount you can borrow changes depending on where you are in the country. For example, everywhere bar London can borrow up to 20% of a property’s value, with the capital allowing home buyers to borrow up to 40% of the purchase price. This discrepancy is caused by the capital’s much higher average house price, with residents of London needing all the help they can get to afford a home.

Elsewhere, Help to Buy is still a great option for first-time buyers and previous home owners alike, so if you think you need help with a property purchase it is definitely worth considering. Additionally, you should take note that by 2021, regional caps will change which might reduce the maximum value of home that be purchase through the scheme. The chief reason behind the regional cap change, is that other regions are equally covered by the Help to Buy scheme. 

How do I know if I’m eligible for Help to Buy?

The following comes from the official government website for Help to Buy: ISA (HM Treasury and the Ministry of Housing, Communities and Local Government). In order to qualify for Help to Buy: ISA you must:

  • be 16 or over
  • have a valid national insurance number
  • be a UK resident
  • be a first-time buyer, and not own a property anywhere in the world
  • not have another active cash ISA in the same tax year: If you have opened a cash ISA this tax year, you can open a Help to Buy: ISA but will have to take additional steps.

To qualify for the government bonus, the property you are buying must:

    • be in the UK
    • have a purchase price of up to £250,000 (or up to £450,000 in London)
    • be the only home you will own
    • be where you intend on living
    • have been purchased with a mortgage

You can use the Help to Buy: ISA with other government schemes, including the Help to Buy: Equity Loan scheme and Shared Ownership.

Help to Buy restrictions

The main restrictions of Help to Buy relate to the types of homes you can buy, their purchase price, and whether you can own a second home. First of all, people on the Help to Buy scheme can only buy new builds; older properties aren’t applicable. Secondly, these new builds must not be valued above £600,000. Finally, under no circumstances can you own or look to purchase a second home (or even be in a position to buy a second home. As a result, if you are able to buy a second home, you will have to repay the Help to Buy equity loan.

How can OneDome help with Help to Buy?

We are the UK’s first transactional property portal, covering every step of the home buying and selling journey, including mortgages. Our friendly team of mortgage advisors have plenty of experience with mortgages of all types, so don’t hesitate to contact us with any questions. You can give us a call on 0202 8686 262 between 09:00 and 17:00.

Curious about how mortgage rates are affected? Our comprehensive guide on mortgage rates is a great place to start.

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