Help to buy scheme – April 2021 – March 2023

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 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?


We’ve helped 1000s of customers, and still counting!

We’ve made it our mission to help as many people as possible find their perfect mortgage, specialising in helping people with a bad credit history or previous credit issues – we think everyone deserves a chance to remortgage or own their dream home!

Difference between going direct to a lender and seeking the advice of a mortgage broker:

Going direct to a lender: This means you go directly to a lender to seek a mortgage, such as a bank or building society. They’ll probably have a range of products and eligibility checks will decide what products and deals you could access; however, you’re limited to what that lender has to offer.

Using a mortgage broker:

A mortgage broker is fully trained and versed in finding the best deal on the market, our brokers, for example, are all experts in bad credit mortgages and work with over 100 lenders. This means they have access to a huge variety of products that you could be eligible for, as each lender will have different approval criteria- and sometimes brokers can even find deals not advertised openly on the market. Your broker will make it clear which lenders are likely to accept your application and can help you prepare so you have the best chances of approval.

Our expert brokers come with a wealth of experience and work with over 100 lenders who consider all applications, even with a bad credit history.

We could help you secure a…

First-time buyer mortgage:
As a first-time buyer, buying your first home is a really exciting time – but it’s a daunting one too. At Clever Mortgages we’re here to help. Your dedicated adviser will talk you through every step, to make sure that you get the right mortgage to match your specific needs.

There are many reasons to consider remortgaging, whether to save money on monthly repayments, get on a fixed rate to help you budget, consolidate debt or raise cash tied up in equity for improvements(link to home improvements blog)– whatever your need, we have access to a wide range of products and could help to secure you finance no matter what your circumstances.

Debt Consolidation mortgage:
A debt consolidation remortgage can help you combine all or some of your debt into one consolidated loan, allowing you to close multiple accounts you may have and only deal with one monthly repayment. You can use a debt consolidation mortgage to consolidate both secured and unsecured debt, and could help you save money on several costly interest rates. Our specialist advisors could help you find the right debt consolidation mortgage for your financial situation, even with bad credit.

Secured loan, or a homeowners loan:
A secured loan allows you to take out a second mortgage on your property while keeping your primary mortgage intact. If you’re struggling to find a remortgage, or if you just want to keep your current mortgage while accessing cash tied up in your home, a secured loan could be the solution for you.

Help-to-Buy mortgages:
The Help-to-Buy scheme means you only need to put down 5% of a home’s value for a deposit. The Government will then boost this amount with an equity loan of up to 20% (40% in London). At Clever Mortgages we work with many lenders who could offer you a Help-to-Buy mortgage whether you’re a first-time buyer or purchasing a new home.

Shared-ownership mortgages:
Whether you’re a first-time buyer or home mover, we could help you buy a share of between 25-75% of a property and then pay rent on the remaining share. Sometimes it’s hard to save up a full deposit, a shared ownership mortgage could help you move into your dream home!

Right-to-Buy mortgages:
Right-to-Buy allows tenants of council properties, and some housing associations, the legal right to buy, at a large discount, the council house they are living in. If you’re a council tenant, we could help you to buy the property at a significant discount through the Right-to-Buy scheme.

Buy-to-Let mortgages
Having a buy to let property could be an investment for yourself or your family.  You may benefit from additional monthly income and capital gains in the value. Our expert brokers can help you purchase or refinance a buy-to-let, even with bad credit.

Self-build mortgage
If you’re planning on building a property you might want to consider a self-build mortgage. Whether you have built several properties before or if you’re planning your first self-build, we could help secure a mortgage that’s right for you.

Second-home mortgage
If you already own a home but are looking to purchase a second property, we could help find the right mortgage for you. With a second mortgage application, there could be more challenges to overcome than with your first mortgage, but Clever Mortgages can support you through the process so you can successfully buy your second home.

Professional mortgage:
Some careers can make it harder to find a mortgage. Perhaps you’re self-employed, or work in contract-based roles, maybe you’re a company director – we can help guide you and our expert brokers can help you find the best mortgage to suit you.

Our advisors and brokers are all fully trained in bad credit situations and work with over 100 lenders, covering almost all financial situations and giving us the ability to help people who might be struggling to find a mortgage elsewhere. We understand that bad credit can happen to anyone, for a variety of reasons but believe everyone deserves a chance to own their dream home and find a mortgage to get back on track.

We could help you get your perfect mortgage, even if you’ve experienced:

Here’s how we helped one couple save £485 a month

Debt consolidation remortgage, even with bad credit Secured a 5 year fixed rate of 2.10%
Consolidated to one monthly payment Credit score repairing

At Clever Mortgages we don’t believe that people should suffer due to a bad credit history. Mr H had been in an IVA and Mrs H was in a Debt Management Plan. They wanted to consolidate their secured loan, plus three other debts, into a new mortgage product – hoping that this would bring down their monthly repayments.

Mr and Mrs H were paying £1,582 and are now paying £1,097 per month.  Clever Mortgages we were pleased to be able to help them make a real difference to their lives, which is also helping them to improve their credit score.

Previous Mortgage£61,000£4901.25%Tracker12 Years
Previous Secured Loan £43,000£43610%Standard Variable Rate12 Years
Previous Unsecured debts£44,320£657VariousVariousVarious
New Mortgage£150,00£10972.10%5 Year Fixed13 Years

Previous Mortgage

Term12 Years

Previous Secured Loan

Term12 Years

Previous Unsecured Debts

Term13 Years

New Mortgage

Term13 Years
Contact Clever Mortgages

Can I get 100% mortgage with 0% deposit?

Usually, lenders require at least a 5% deposit to readily provide a mortgage. A higher deposit means you’ll be eligible for more lenders and products, plus access to better rates- however, this isn’t always an option for first-time buyers in the current market. For those who can’t save up a deposit, or those who want to get onto the property ladder as soon as possible, there are other routes you can take that involve a much smaller, or no deposit.

What is a 100% mortgage?

A 100% mortgage, in the simplest terms, would be a loan that covers the total value of the property you’re purchasing, without the need to save a deposit of your own. It would entail the prospective buyer loaning the full cost of the property using a single provider.

It’s vital to be aware that whereas this may sound appealing, especially to first time buyers – a 100% mortgage (using just one provider to lend the full purchase price) is extremely rare, or unavailable in the current market. Lenders generally view a 0% deposit mortgage as a very risky investment.

Types of 100% mortgages

The only types of 100% mortgages currently available are guarantor, Right to Buy and Shared Ownership mortgages. But even these are not truly 100% mortgages.

Guarantor mortgages

Are possible if you have a close family member who is both able and willing to help, requiring them to offer their own savings, property (or both) as security for your loan, thereby becoming your guarantor. Your guarantor would be liable for any payment you miss and would be partially responsible for your mortgage.

Right to Buy

A right to buy scheme that gives you the right to buy your council house at a discounted price if you fit certain criteria. Some lenders allow you to borrow 100% of the discounted price (the discount varies depending on the type of property and the duration of your tenancy), with the different between the discounted price and the full value of your property acting as the deposit. LINK TO BELOW INFO

Shared Ownership

A scheme where you purchase a percentage share of the property, say 25%, and pay rent to the housing association for the other 75%.  Some lenders will allow you to borrow a 100% of the share you purchase, most lenders however require you to put in a 5% deposit.
For example, take a property that’s valued at £150,000, You could buy 25% of the property, which would be £37,500. Of that you would need to put down £7,500 (5%) for the deposit then take out a mortgage with a lender to pay the remaining £30,000 (20%). LINK TO BELOW INFO

Can I get a 100% mortgage?

With a willing and able guarantor or via one of the schemes mentioned above, you could be eligible for a 100% mortgage with a 0% deposit – however, deals are scarce and there’s no guarantee you’d be offered a 100% mortgage. It’s advisable to speak to an experienced mortgage broker to get the best information for your personal situation – mortgage brokers have access to a wide range of products and should be able to help you onto the property ladder.

  • Guarantor Mortgage Types
  • Family deposit mortgages
  • Saving as security

If your family member wishes to use their cash savings as security for your loan, some lenders will offer a mortgage where your family members deposit around 10/20% of the property price in a special savings account. This money will be held as security for your mortgage until certain conditions have been met, whether that be based on a set number of years or until you’ve paid off a pre-agreed sum of your mortgage, at which point your family member would have their savings returned.

It’s still possible for your family member to earn interest on the money that’s being held – however, it may be at a lower rate than other savings accounts. It’s well worth speaking with a mortgage broker to find the best deal for you and your family.

Communication between yourself and your guarantor is key; they must be fully aware of their responsibility and understand the terms of the agreement made. If you are unable to meet your mortgage repayments, the lender will look to your guarantor to make the payment. If the lender had to repossess the property and it was sold with negative equity, your family member’s savings could be used to make up the difference.

Property as security

Your family member can choose to use their own property as security for your mortgage. Your family member would need to own at least 25%-60% of their home outright for this to be viable but, like using savings as security, as long as you are able to keep up repayments for your mortgage, this can allow first-time buyers struggling to save up a deposit to get onto the property ladder.

Family offset mortgages

A family offset mortgage allows parents to help their children or grandchildren to take out a mortgage and help them onto the property ladder.

This type of mortgage works by you putting your savings into a linked savings account (with your child or grandchild), which is set up with the mortgage lender.

This then acts as a deposit for their chosen property and the lender provides the finance for the remaining value amount. Obviously, the more money that’s in the bank account – or offset against the property value – the smaller your child or grandchild’s mortgage will be.

Interest isn’t paid on the amount in the bank account – only on the amount that your child or grandchild takes out as part of their mortgage. This rate will depend on the lender, rate and term.

What’s good about this type of mortgage is that the savings remain in your name. You can take your money back once 75% of the property value has been paid back. You won’t gain any return by helping your children or grandchildren in this way, but you also won’t lose anything.

Some lenders allow parents to deposit cash that reduces the interest charged on the child or grandchild’s mortgage. Others allow buyers to borrow 100% of the purchase price if 20% of this amount is deposited in the linked account. This cash is then subject to a charge.

Family link mortgages

The Post Office Family Link mortgage allows first-time buyers to borrow 100% of a property’s value, using the (outright owned) property of a close relative by taking out two mortgages; one on the home you wish to purchase, and one on the home your relative owns outright. This option is popular with parents who’d like to help their children get onto the property ladder but don’t have access to a large lump sum to help.

The Post Office would loan you 90% of the value needed to buy your home as a mortgage, and as the buyer, you’d be the only person named on this. The remaining 10% needed for a deposit would be taken as a mortgage secured against your family member’s home, with both of you being named on the mortgage but you won’t be added to the deeds of your relative’s property.

You, the buyer, would be expected to make two separate monthly repayments for the first five years. One repayment towards your family member’s mortgage – which is interest free, and one repayment towards your own mortgage – which is subject to interest. For the remaining term of your mortgage you’d only have to make one monthly repayment towards your mortgage until it’s paid off.

It’s important to make sure the repayments are manageable, or you’d risk losing your property.

If you don’t have a potential guarantor, there are other solutions to help you in your journey to purchase your first home.


Can I get help with buying my first home?

Help to Buy

Help to Buy is a UK Government-funded project, designed to help people with lower incomes get onto the property ladder. There are several schemes within Help to Buy, focussing on different aspects of the buying process and all created to help as many people as possible secure their own homes.

Help to Buy – Equity Loan

The Help to Buy equity loan scheme gives you the chance to purchase your home with a small deposit by boosting the amount you’ve saved. You would initially be expected to save up a minimum 5% of your deposit, then using the Help to Buy equity loan, the Government would grant you a loan of up to 20% (of the property’s value) – giving you a 25% deposit and access to far more mortgages and better deals.

The Help to Buy equity loan is available to first-time buyers and current homeowners – however, the property must be a new-build and can’t exceed the value of £600,000. The Government also provides a slightly altered scheme in London for prospective buyers, offering an equity loan up to 40% of the property’s value, reflecting the increased property costs that London dwellers face.

If you have more than 5% saved, don’t worry! You can save up to 65% of your deposit and still be eligible for this scheme – if you use a minimum of 10% Help to Buy equity loan and a minimum 25% mortgage.

Another huge benefit of this initiative is the interest – or lack-of. You won’t be charged any interest for the first five years of taking out your equity loan. After that you’ll only be charged a fixed fee of 1.75%, which rises each year following the increase of the Retail Price Index, plus 1%.

The Help to Buy equity loan scheme has been extended to 2023, meaning there is still time to save up a 5% deposit and take advantage of this offer, However the scheme is being amended from 2021. This scheme is available in England – and although there Help to Buy opportunities in Scotland, Wales and Northern Ireland, the terms are slightly different, so it’s worth looking this up if you want to buy a house in any of these areas.

It’s important to be aware that you can’t use the Help to Buy scheme to buy a second home or property to let.

Help to Buy – ISA

Unfortunately, the Help to Buy ISA scheme ceased accepting new applicants November 2019, if you’re eligible you can still apply for a Lifetime ISA.

Help to Buy – Shared Ownership

The Help to Buy shared ownership scheme is, a combination of buying and renting. Often aimed at first-time buyers and low-income households, this initiative allows you to buy a share, usually around 25% – 75%, of a resale or new-build home. You would own some of the house and pay a reduced rent for the rest.

This allows prospective buyers on a lower income to access the property ladder, as your deposit would be a percentage of the share being purchased as opposed to the overall cost of the property, meaning you would need a much smaller deposit and mortgage than with full ownership.

Shared Ownership properties are always leasehold, meaning you’d own the properly for a pre-agreed span of time but not the land. It’s possible to renew leases. You do have the right to buy additional shares in the property, if your share reaches 100% equity, the property would no longer be shared ownership. It’s important to check if there’s a cap on the number of shares you can purchase in the property as this may hinder those who aspire to full ownership.

Right to Buy

Right to Buy is a Government initiative aimed at helping local authority tenants to buy their council homes with a substantial discount.

The discount you get is based on the:

  • Market value of the property
  • Type of property, for example house, flat
  • Amount of time you’ve rented and lived in the property

There is a limit on the discount you can receive but the savings are still substantial, making this a great solution for council tenants to get onto the property ladder. If you’re purchasing a property with a Right to Buy mortgage and you’ve lived in the property for 3-5 years, you could be granted a discount of 35%. After that the discount increases 1% for each additional year you’ve been a council tenant.

To qualify, you must have been a council tenant for a minimum of 3 years. This doesn’t have to be a consecutive 3 years, so, if you had a spell of renting privately in between living in a council home, then you could still be accepted.

You’ll still have to provide a deposit and take out a mortgage with the Right to Buy scheme, but if you’re struggling to save enough for a deposit, some lenders may allow you to put your discount towards the purchase price, meaning you wouldn’t need the initial lump sum.

If you were renting a council home before it transferred to another landlord (such as a housing association), you might still be eligible to buy your home with the Preserved Right to Buy scheme.

Lifetime ISA

A Lifetime ISA, or LISA, is a savings account designed to help people aged between 18-39 buy their first home or save up for retirement. Using a Lifetime ISA, you can put in up to £4,000 per tax year, which leads on to one of the most attractive features – the bonus.

The Government will pay a 25% bonus into your Lifetime ISA account, up to a maximum of £1,000 per tax year. This bonus would be paid in monthly so you’d benefit from compound growth – plus, any interest you earn on what you save would be tax-free.

So, if you save £2,000 in a tax year, the Government would pay you a bonus of £500.

It’s important to remember that you can’t just withdraw the money from your ISA to spend on whatever you like without facing a penalty – unless it’s to help buy your first home. After you turn 60, the money can be used as you like to support your pension. If you withdraw any before you’re 60 though, you could face a 25% penalty on the total amount in your account.

At Clever Mortgages, we have access to a wide range of mortgage solutions. Get in touch now and let’s discuss your lending requirements.


  • 100% mortgages are evolving with lenders, meaning more 100% mortgages are being created with different criteria, this means more people in more varied financial situations might be able to access new types of 100% mortgages.
  • Gives you the opportunity to buy a property without saving up a deposit
  • Some 100% guarantor mortgages allow your family member to earn interest on savings that are used as security


  • It’s hard to find and get approved for a 100% mortgage. Lenders don’t offer them very often, and when they do- they often have higher interest rates than 95% or less LTV mortgages
  • You usually need a close family member who’s both willing and able to be your guarantor
  • If your mortgage requires savings as security, not all deals allow your guarantor to earn interest and the money will be inaccessible during the term of your mortgage
  • If your mortgage requires your guarantor to hold their home as security, your family member’s home could be at risk of repossession if repayments aren’t made
  • You still need to consider all the associated fees with buying a property, borrowing 100% of a property’s value with a mortgage won’t cover the other fees.
  • If you borrow 100% of the properties value and the property drops in value, you risk not being able to pay off your full mortgage should you chose to remortgage or sell.

If you can’t get a 100% mortgage?

If you can’t get a 100% mortgage, you should look at the property prices in the area you’d like to purchase a property and aim to save a deposit of 5% or more. Saving up can be daunting, but it doesn’t have to be – check out our guide on saving for a deposit

Help to Buy mortgage

A Beginner’s Guide to Help to Buy Mortgages (HTB)

A Beginner’s Guide to Help to Buy Mortgages (HTB)

Homeownership is becoming a distant dream for a growing section of the British population. According to government data, the average age of first-time homebuyers has increased across the country, with only 27% of Brits under-35 owning their home in comparison to 65% in the 1990s.

Are you a first-time homebuyer struggling to come up with the down payment? Don’t worry, the government can help you. The UK government launched the Help to Buy (HTB) mortgage scheme in April 2013 to help first-time homeowners, as well as existing homeowners, buy a property.

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

What is a Help to Buy (HTB) mortgage?

The Help to Buy scheme is a government-aided initiative to help first-time homebuyers and existing homeowners purchase a new property buy helping towards the deposit. There are two primary options under HTB program: equity loan and shared ownership.

We’ll focus on Help to Buy equity loan in this post.

Financial assistance under HTB mortgage

Here is how you receive financial aid under Help to Buy (HTB) equity loan.

  • The government provides an equity loan of up to 20% of the price of the house (40% in London), subject to a maximum purchase price of £600,000.
  • The borrower must contribute at least 5% of the price of the property, and the rest (75% or 55% in London) is borrowed from a mortgage lender. As per the rules, you must apply for a minimum mortgage of 25% to qualify under the program.

Repayment terms and interest rate of HTB mortgage

  • The maximum repayment term for a Help to Buy equity loan is 25 years. You have to repay the exact percentage amount (20%) to the government upon the sale of the property.
  • You can repay the loan anytime during these 25 years. However, you have to pay at least 10% of the market value of the house in an early repayment.
  • There are no interest payments during the first 5 years of the government loan, but past that, you’ll pay 1.75% plus 1% as interest. The interest rate will rise in proportion with the inflation or Retail Price Index (RPI).
  • There is a monthly management fee of £1 for the first 5 years.

How do you qualify for a Help to Buy mortgage?

The government has set some qualifications for Help to Buy mortgages.

  • The property should be newly built with a maximum price of £600,000.
  • As the borrower, you need to contribute at least 5% (of the property’s value) as a deposit.
  • You must take a traditional mortgage (from a qualifying lender) of at least 25% of the house price.
  • If you are purchasing a house in London, your contribution and mortgage must cover 60% (55% Mortgage/5% deposit) of the house price. If you’re buying a home outside London, the amount rises to 80% (75% mortgage/5% deposit) of the cost of the property.
  • The maximum primary mortgage amount cannot exceed 4.5 times of your household income.
  • The Help to Buy program is not available for buy-to-let purchases. It has to be your primary residence, and you cannot sublet it until the HTB loan is repaid.

How Help to Buy mortgages will change in 2021?

The Help to Buy mortgage scheme is set to undergo significant changes after March 2021.

Under the new rules (applicable between April 2021 and March 2023), only first-time homebuyers will be eligible for a HTB loan. Additionally, the government will introduce regional limits for the maximum house price instead of the current £600,000 country-wide limit.

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!

key to a help to buy mortgage house

Is The Help To Buy Scheme Really Helping?

A new report by the National Audit Office (NAO) shows that many of people on the Help to Buy scheme could have afforded a house regardless – now some of those buyers are in negative equity, and in a situation far worse than if they’d gone it alone.

Firstly, what is the Help to Buy scheme?

Help to Buy was launched in April 2013 by former chancellor George Osborne as a way of getting more buyers onto the property ladder. It’s open to both first-time buyers (who it was largely aimed at) and home-movers too, but is only ever available for buyers of new properties. Essentially it involves:

  • The buyer has to have at least 5% of the sale price of a new-build flat or house as a deposit.
  • The government lends the buyer up to 20%, or 40% if you live in London, of the sale price. This loan is interest-free for five years. Afterthe interest-free period, buyers are charged 1.75% on the outstanding amount as interest. This fee increases each year by Retail Price Index plus 1%.
  • The buyer borrows the rest (up to 75%, or 60% if you live in London) from a mortgage lender, on a repayment basis.
  • Buyers need to repay the equity loan in full after 25 years, when the mortgage term finishes or when you sellyour home – whichever happens first.

The scheme is currently due to end in 2023, bringing an end to a flagship loan programme that currently divides financial critics – some feeling it boosted, and others that it harmed, the UK property market.

It’s now been used to support more than 200,000 purchases. It was introduced by the government with the aim to improve on a falling in property sales, following the financial crash in late 2008, and the tightening of regulations over the availability of high loan‑to‑value and high loan-to-income mortgages that followed on from this. Michelle Neville, Sales Director at Clever Mortgages tells us: “At Clever Mortgages we fully understand the needs and drivers for first-time buyers.  We help people day-in-day-out get their first mortgage secured, and we know from speaking to our customers how tricky it can be to get on the property ladder. But sometimes customers are surprised that getting a mortgage can in fact be easier than they first think, and with our guidance they can find ways of borrowing more, even with less deposit. We work with a trusted range of lenders, and all have their specialisms for differing needs.”

So, what are the criticisms of the Help to Buy scheme?

The new report suggests that some buyers using the scheme risk finding themselves in negative equity. The National Audit Office also highlighted figures showing that many people using the government’s Help to Buy scheme could have purchased their properties without it.

Perhaps surprisingly, the scheme isn’t means tested. Around one in 25 home buyers using the scheme had household incomes of over £100,000, 10% of buyers had household incomes of over £80,000, or over £90,000 in London, the National Audit Office (NAO) said, and so could have afforded to buy their own home themselves, even if it wasn’t in their ideal location.

The Help to Buy scheme can be a useful aid for many people, but it’s not always the most suitable option. If you’re a first time buyer considering the Help to Buy scheme, speak to us first to see if it really is the most suitable option for you’.

Help to Buy and the property market

The Department’s independent evaluations of the Help to Buy scheme show it has increased home ownership and housing supply – and has therefore achieved that goal, or at least in the short-term.

Housing firm Persimmon, for example, is the biggest beneficiary, with almost 15% of the sales made under the Help to Buy Scheme. Redrow made up 3.7% of sales, Bellway accounted for 6.7%, Taylor Wimpey made up 11.9%, and Barratt made up 13.3% %, according to the NAO’s analysis.

The report states that the government will aim to wean the property market off the scheme over the coming years, whilst still ensuring that developers continue to build new properties at the rates they are doing at the moment.

I’ve bought a house with Help to Buy – what next?

If you’re concerned about the findings from the report, and aren’t sure when or how you can end  your commitment to the scheme, or whether you’re in negative equity, now’s the time to seek advice.

  • Now’s the time to look into your situation – waste no time in gathering your documents, and setting aside some time to review them to find out exactly where you stand.
  • Crucially, find out whether you’re in negative equity. Negative equity means that your house value is less than what you owe on it – so you’ll need to know what your house is worth now, and what your current mortgage balance is.
  • Find out the terms you had when you took out the scheme – there’ll most likely be a set amount of time you have to pay the loan off over.

Seek expert help. It might be time to remortgage, we help customers every day find a great remortgage deal that’s right for them, even if they have bad credit.

We can help

Clever Mortgages help first time buyers every day to take their first step on the property ladder. If you’re moving house and want to speak to one of our expert brokers about next steps, get in touch today.

Michelle Neville says, “Do get in touch, our brokers are experts in finding the right lender whatever the situation. We can offer advice to you if you’re on the Help to Buy scheme and aren’t sure what your next move should be – or if you’re a first-time buyer who’s exploring your options.”