The UK government has lots of support schemes for people buying a house.
And one of the most well-known is ‘Help to Buy’.
This blog explores what Help to Buy is and what alternatives there are to it.
What is Help to Buy?
Help to Buy was first introduced in the UK in 2013. It aims to help people buy a home.
The scheme can work in a few different ways. It could give an equity loan that reduces the deposit and mortgage.
This offers a government guarantee to lenders. Especially on high loan-to-value (LTV) mortgages. Or it could discount the price of new-build properties.
There have been three main strands to Help to Buy.
1. Help to Buy Equity Loan
Gives buyers a loan towards their deposit. This scheme has now ended.
2. Help to Buy Mortgage Guarantee
This scheme offers government backing on 95% LTV mortgages. It is still open.
3. Help to Buy New Homes
Offers discounts on new build properties. This closed in 2021.
Is Help to Buy still open?
The original Help to Buy equity loan scheme closed to new applicants on October 31st 2022.
This scheme allowed first-time buyers to buy new build homes with just a 5% deposit.
But the Help to Buy Mortgage Guarantee scheme remains open. And has recently been extended until June 30th, 2025.
Offering a government guarantee encourages lenders to provide mortgages on a 5% deposit.
So, first-time buyers and homeowners can still access 95% LTV mortgages through Help to Buy. But the equity loan option is no longer available.
Is Help to Buy available in all UK countries?
The original Help to Buy equity loan scheme is no longer available in England.
But, similar Help to Buy style schemes are offered by the devolved governments in Scotland, Wales, and Northern Ireland. These include the following.
Help to Buy (Wales)
Offers shared equity loans on new-build homes. Like the now-closed English Help to Buy scheme.
Help to Buy (Scotland)
Closed in 2021 but ran a similar equity loan scheme.
Co-ownership scheme
Operates in Northern Ireland, allowing buyers to get a share of a property.
So, Help to Buy in its original form no longer exists. But equivalent schemes are available to first-time buyers in other nations.
Is Help to Buy only for first-time buyers?
When launched, Help to Buy targeted first-time buyers struggling to access the property ladder.
The Help to Buy Mortgage Guarantee is open to first-time buyers and existing homeowners looking to move.
To be eligible, you just need to be able to afford the monthly repayments and have a minimum 5% deposit.
Will Help to Buy ever become active again?
It’s unlikely that the original Help to Buy equity loan scheme will be reintroduced. This closed as planned in October 2022.
The government says it achieved its aim of stimulating the property market and helping people buy their first home.
Critics argued it inflated house prices and didn’t offer good value for taxpayers.
In the 2021 budget, the government announced a new scheme called First Homes to replace Help to Buy equity loans.
First Homes offers discounts of at least 30% on new-build properties to first-time buyers.
The Help to Buy Mortgage Guarantee scheme will remain in place until mid-2025 to continue supporting 95% LTV lending.
But, major intervention through equity loans looks unlikely to return.
What are alternatives to Help to Buy?
Shared ownership
Shared ownership enables you to a share in a property (25-75%) and pay rent on the rest.
Lifetime ISAs
Save with a government bonus of 25% towards your first home.
First Homes
Discounted new properties sold up to 30% less for first-time buyers.
Right to Buy
Allows council tenants to buy their property at a discount.
Speaking to a mortgage broker is also essential to find the most suitable mortgage product and lender for your circumstances.
How do I apply for Help to Buy?
You don’t apply for the Help to Buy Mortgage Guarantee scheme directly. Lenders decide whether to use the government guarantee.
To access one of these mortgages, you apply in the same way as any other mortgage. Use a broker to find the most competitive rates and products you qualify for.
When applying, your lender decides eligibility criteria. This may include factors like your income, credit score and history.
You can then be approved for a 95% LTV mortgage backed by Help to Buy.
