The UK government has created the Help to Buy and Right to Buy schemes to help hard-working people like you take steps to buy your own home.

Help to Buy: Equity Loan

Right to Buy

Help to Buy: Shared Ownership

Help to Buy: Equity Loan


Example: for a home with a £200,000 price tag

The Government lends you up to 20% of the cost of your new build home, so that you’ll only need a cash deposit from 5% and a 75% mortgage to make up the rest.

If the home in the example above sold for £210,000, you’d get £168,000 (80%, from your mortgage and the cash deposit) and you’d pay back £42,000 on the loan (20%). You’d need to pay off your mortgage with your share of the money.

London Help to Buy

To reflect the current property prices in London, from February 2016 the Government increased the upper limit for the equity loan it gives new home-buyers within Greater London from 20% to 40%.

Example: for a home with a £200,000 price tag

Am I eligible?

The scheme is open to both first time buyers as well as homeowners looking to move.

There is no maximum household income.

You can purchase a property with a maximum value of £600,000.

You will need a minimum 5% deposit to qualify.

To apply you will need to find a property through a participating registered builder and complete their relevant paperwork.

Help to Buy equity loans are only available in England, although similar schemes have been made available by the Scottish Government, the Welsh Government and the Northern Ireland Housing Executive. Equity loans are open to people who want to buy a new-build property, and who have a 5% deposit available. The government will top up your deposit with an equity loan of up to 20% of the property value (maximum £120,000) – in this case, you would take out a 75% mortgage from a lender to buy the property. For buyers in London only, the maximum equity loan is 40% of the property value, up to £240,000. The maximum full purchase price is £600,000 in both London and the rest of England.

Once everything is up and running, you will make monthly payments to the mortgage lender as normal, but when it comes to the equity loan no interest is charged or regular repayments required – other than a £1 monthly management fee collected by Direct Debit – for the first five years. After five years, an interest rate of 1.75% is charged; in subsequent years, the interest fee increases by inflation (measured as the percentage increase in the retail price index) plus 1%.

You can either repay the loan in stages (in minimum 10% increments) at any time, or pay it off when you sell the property; the maximum repayment term for the Governments equity loan element is 25 years.

It is important to be aware that when you repay an equity loan, the repayment amount is based on the value of your property at that time, not the original loan amount. For example, let’s say you were buying a property for £200,000. You have a £10,000 deposit (5%), take out an equity loan for £40,000 (20%) and take a mortgage for £150,000 (75%) to complete the purchase. If you sell the property in 10 years’ time and the value has risen to £300,000, then you would need to repay £60,000 (20% of the property’s sale value) to the equity loan. Your share of the sale proceeds would be £240,000 (80% of the sale value) from which you would repay any outstanding mortgage balance.

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Help to Buy: Shared Ownership

Shared ownership schemes have existed in various forms for years, and under the current Help to Buy scheme are available to first time buyers, people who used to own a home but can not afford to buy one now, or who are an existing shared owner looking to move. If you have a household income of under £80,000 a year (or £90,000 in London) shared ownership allows you to take out a mortgage to buy a percentage of the property (typically between 25% and 75%) and pay rent to the housing association for the remaining portion of the property, which they own.

The Help to Buy shared ownership scheme can be used to purchase either designated newly built or existing properties. Similar shared ownership schemes are available in Scotland, Walesand Northern Ireland. Alternative schemes are also available for people over 55 (Older People’s Shared Ownership) and who have long-term disabilities (HOLD – Home Ownership for People with Long-Term Disabilities).

Buying a New Build

There can be many advantages in purchasing a newly built property over an older home; a modern property with brand-new fixtures and fittings, often much more energy efficient than older houses, and usually with smoke and burglar alarms fitted. Add to this the avoidance of the dreaded “property chain”, and the sometimes generous incentives offered by property developers, and it can be an attractive proposition.

The currently available Help to Buy schemes – equity loans and shared ownership, as well as the Help to Buy ISA that is designed to help homebuyers save up for a deposit – make it easier than it has been in years to purchase a modern, newly built home.

Other Affordable Home Ownership Schemes

Although equity loans, shared ownership and the Help to Buy ISA are the only schemes currently branded under the Help to Buy umbrella, they are not the only affordable home ownership schemes out there.

Right to Buy

Are you a council tenant, or were you living in your home when the council transferred it to another landlord?

If yes, now might be the ideal time to think about buying your home.

That’s because the top discount under the Right to Buy in England has been increased. From 6 April 2019 you could get a maximum discount of up to £82,800, or £110,500 if you live in London. This amount increases every year in April in line with inflation.


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