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Help to Buy

What is Help to Buy and how does it work?

The popular Government-funded Help to Buy Equity Loan is available until 2021, so you can find your new home with just a 5% deposit. With competitive mortgage rates available, now really is a great time to buy.

The Government lends you up to 20% (40% in London) of the cost of your newly built home, so you’ll only need to provide a 5% deposit and arrange a 75% mortgage to make up the rest of the purchase price. This will often mean that a mortgage lender will offer you a better interest rate as there is less risk on their behalf.

You won’t be charged loan fees on the 20% loan for the first five years of owning your home.

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If the home in the example above sold for £175,000, 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.

Who is Eligible

The scheme is available to first-time buyers and existing homeowners. The home you buy must be your only residence. Help to Buy is not available to assist buy-to-let investors or those who will own any other property after they complete.

The terms of the scheme vary between England, Scotland, Wales and London, so take a look at the Help to Buy Scheme in your area for more details.

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For more information (including advice on fees and paying back your loan), speak to a mortgage specialist.

Getting that 5% deposit

Your deposit does not have to come from savings. You can use any of the below sources;

• Gifted deposit – This is when an immediate relative provides all or some of your deposit. Not all lenders will accept this so it’s important to speak to a mortgage specialist first.

• Help to Buy ISA – A savings account which the government contributes towards when you purchase a property. You can easily open an account with most banks.

• Save Save Save – Work out a monthly budget and so long as your outgoings are not to high you should be able to save up a deposit in a matter of months not years.

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Need help planning?

A mortgage specialist can help you sort out your finances and plan your way to having a deposit ready. These appointments are free and it means that when you come to need a mortgage, you will have an adviser that knows you already!

Next steps

Read our other Mortgage Guides.

Try our Mortgage Calculator.

‘How much can I borrow for a mortgage?’

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