Help to Buy (HTB) is a government scheme. It allows first-time buyers of a new build to borrow up to 20% of
the property's value (or 40% in London). The loan is directly from the government and you pay the capital
back when you sell.
In 2015, the government launched the HTB ISA, a savings account designed specifically to help you save for your first
home deposit. As long as you follow the scheme rules and can prove that you've completed on your purchase, the
government will pay a 25% bonus on your saved capital once you close the ISA.
Find out more about shared ownership
HTB Equity Loan
The HTB Equity Loan scheme is available for new build properties with a purchase price of up to £600,000, with
regional price caps applicable to set the maximum purchase price in your area.
The government will lend you up to 20% (40% in London) of the cost of a brand new home, meaning you
only need a 5%
cash deposit and a 75% mortgage.
The HTB scheme has recently changed, and any application submitted to HTB from December 16th 2020, and any purchase
completions taking place from 1st April 2021, must be on the updated HTB scheme.
The main changes to the scheme are:
- Regional price caps have been introduced to reflect regional property price differences. HTB London remains at a
maximum of £600,000, and for non London areas the maximum purchase price now varies from £186,100 - £437,600
depending on where in England you are purchasing. See the table below for the regional limits across England.
- All purchasers through the scheme must not own a home or residential land now or in the past in the UK or abroad.
- All HTB homebuilders must have agreed to sign up to the New Homes Ombudsman, which will launch in 2021. This
scheme aims to promote and enforce high building standards.
- Homebuilders are not allowed to charge any ground rent on HTB properties.
- The interest paid for the HTB scheme from year 6 has changed. This is now set at 1.75% of the equity loan
in year
6, and then increases by the Consumer Price Index (CPI) + 2% per annum thereafter. The equity loan remains
interest
free for an initial 5 year period.
The government has committed to the HTB scheme being available for new buyers until 31 March 2023.
Help to Buy: Equity Loan price caps April 2021 to March 2023 |
Region |
Maximum property price |
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 |
Help to Buy ‐ London
If your dream is to own a home in the capital, an adapted version of the Equity Loan scheme could be for you. The
Government introduced a London-only version of Help to Buy in February 2016, available across all Greater London
boroughs. You're eligible if you have a 5% deposit to put down on your new home. This version has an upper
loan limit of up to 40% of your purchase price rather than the standard 20%, and works the same as the
nationwide scheme.
With Help to Buy ‐ London, you won't be charged loan fees on the 40% loan for the first five years
of owning your home, apart from a nominal monthly £1 per month fee.
HTB Equity Loan and HTB London ‐ who's eligible?
They are available if you're a first-time buyer, and you want to buy a brand new home with a purchase price of up to
£600,000. You don't qualify if you own any other property, including if you want to sell up and move to a
purchase
using the scheme, or a second home or any rental properties
Equity Loan and Help To Buy Loan table comparison
|
Help to Buy (London) |
Help to Buy (South East England) |
Type of property |
New builds only |
New Builds Only |
Maximum home purchase
| £600,000 |
£437,600 |
Minimum deposit
| 5% |
5% |
Maximum home purchase
| n/a |
n/a |
Equity loan from Government
| up to 40% of property value |
up to 20% of property value |
Scheme fees
| £1 a month in the first 5 years 1.75%
of loan value in sixth year
Then RPI + 2% per annum |
£1 a month in the first 5 years 1.75%
of loan value in sixth year
Then RPI + 2% per annum |
Mortgage required
| up to 55% of property value |
up to 75% of property value |
For first time buyers?
| Yes |
Yes |
For existing homeowners?
| No |
No |
For investment properties?
| No |
No |
For buy-to-let homes?
| No |
No |
For interest-only mortgages?
| No |
No |
For repayment mortgages?
| Yes |
Yes |
Available to
| 31st March 2023 |
31st March 2023 |
* HTB = Help To Buy
* The government will guarantee part of the repayment of the mortgage to the lender, therefore increasing the
availability of mortgages at competitive interest rates.
Help to buy London example
For a property worth £400,000 |
Amount |
Percentage |
Cash deposit
| Equity loan |
Your mortgage |
£20,000
| £160,000 |
£220,000 |
5%
| 40% |
55% |
If the home in the table above sold for £420,000, you'd get £252,000 (60%, from your mortgage
and the cash deposit) and pay back £168,000 on the loan (40%). You'd need to pay off your mortgage
with your share of the money.
Help to buy South East England example
For a property worth £200,000 |
Amount |
Percentage |
Cash deposit
| Equity loan |
Your mortgage |
£10,000
| £40,000 |
£150,000 |
5%
| 20% |
75% |
If the home in the table above sold for £210,000, you'd get £168,000 (80%, from your mortgage
and the cash deposit) and pay back £42,000 on the loan (20%). You'd need to pay off your mortgage
with your share of the money.