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Help to buy scheme – April 2021 – March 2023

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The new Homes England Help to Buy Equity loan scheme commenced on the 16th December 2020.  This scheme is only open to first time buyers purchasing a new build property.

The scheme is coming to an end in 2023, to see important dates, please see the bottom of the page.

The scheme is design to help people struggling to save their own deposit to meet lenders requirements and get on the housing ladder.

Even if you currently have or have had previous bad credit, a poor or low credit score, the Help to Buy scheme is still available to you.

How does it work?

All parties to the scheme need to be first-time buyers and purchasing a newly built property in England to apply.  The builder also needs to be registered with the Help to Buy scheme.

You can borrow a minimum of 5% and up to a maximum 20% (40% in London) of the purchase price.  The equity loan is from the Government, which is used as a deposit on the property and the Government have a percentage stake in the property.

There is a maximum purchase price cap by English region

Region (England)

Maximum property price

East Midlands


West Midlands


East of England


Yorkshire and the Humber


North East


North West




South East


South West


Do I need to have my own deposit?

Yes, the scheme and a mortgage lender will expect you to have your own deposit, a minimum of 5% of the purchase price.  This is added to the Government equity loan and along with a new mortgage you will have the funds to purchase the property.

How does the Government Equity loan work?

The equity loan is interest free for the first 5 years, after that you will pay interest on the loan amount.  This allows you to get familiar with budgeting to live in your first property, so please ensure you factor in this additional cost at the 6-year point, unless you plan to pay the loan off.

The payments you make at the 6 year point are to pay the interest only, you will not reduce the amount owed, that balance stays the same.  However, you can repay all or part of the equity loan at any time and reduce the balance.  The minimum repayment is 10% of the value of the property at the time of the repayment and you have to pay in 10% multiples.

You only pay interest on the original amount borrowed from the Government, this amount doesn’t change.

What repayments will I make?

You will of course pay monthly for your new mortgage and these payments will be confirmed by a mortgage adviser.

The Government equity loan is interest free for the first 5 years.  You must pay a £1 monthly management fee.

After the 5 years, you continue to pay the £1 monthly management fee, plus interest on the equity loan.  The current interest rate is 1.75% and this will increase each April by the Consumer Price Index (CPI), plus 2%, and that’s of the interest rate and not added to it.  For example it won’t be 2.75% (1.75% + 2% (assuming no increase to CPI) it will be 1.75% x 2% = 0.035% + 1.75% = 1.785%  You must continue to make these two payments until the equity loan is repaid.

Your mortgage adviser can help you work out these payments and review your budget with you.

When do I repay the equity loan?

When you sell your home, you will be expected to repay the loan.  Also, if you reach the end of the equity loan term (maximum 25 years) or you pay off your mortgage.

If you failed to meet the terms of the equity loan contract you could be asked to repay the balance in full.

The amount you pay back is based on a percentage of the market value at the time you want to repay some or all of it.  Therefore, if the value of your home increases so does the amount you owe on the equity loan, if the value falls, so does the equity loan.  For example, if your equity loan was 10% you will have to pay 10% of the properties value at the time you repay the balance.

How do I apply for an equity loan?

You’ll need to find a new build property provided by a builder registered with the Help to Buy scheme.  You can contact your local Help to Buy agent by clicking here, they can also help you with the Help to Buy application.

The next step is to apply for a mortgage, or if you want to get an idea of your lending options, especially if you have or had bad credit then contact Clever Mortgages.

For properties in Wales and Scotland

Similar schemes exist in both Wales and Scotland.

In Wales the maximum property price is £300,000, with a 5 year interest free loan and is also called Help to Buy.

In Scotland, the scheme is called Affordable New Build Scheme and for properties up to £200,000 in value.  The Scottish Government loan is a maximum 15% but is interest free for the whole duration of the term.

You can search each Governments site to find more information. Wales or Scotland 

Bottom Line

If you’re a first-time homebuyer, all these details and technicalities could be overwhelming. Clever Mortgages are a team of experts that help first-time homebuyers go through the entire financing and home buying process. We have helped lots of clients through the HTB buying process with step-by-step assistance.

Remember, even if you currently have or have had previous bad credit, the Help to Buy scheme is still available to you.

If you’re ready to become a homeowner, give us a call today!

Why use a broker?


Help to Buy: the key dates

If you’re considering buying a property using Help to Buy, these dates are very important:

  • 31 October 2022, 6pm: this is the final deadline to reserve a home and submit a Property Information Form to your Help to Buy agent
  • 31 December 2022: the property you’re buying must be ready for practical completion – this means it must be fully built and ready to live in
  • 31 March 2023, 6pm: you must have completed the purchase and moved into your new home.

If a developer won’t be able to meet these dates, you should be informed before you commit to buying the property. 

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