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Help to Buy is a government-backed initiative to help home-hunters purchase a property with as little as a 5% deposit. Schemes available through Help to Buy include Equity Loan Scheme and Mortgage Guarantee Scheme.

Help to Buy Equity Loan Scheme

The ‘main’ strand of Help to Buy scheme is Equity Loans, which is only available in England, and not in other parts of the UK.

In principle, you pay a deposit of 5% on a property worth up to £600,000, the government pay a lump sum towards the transaction, and take an equity stake of up to 20% in the property.

After five years, you begin to pay fees for this, but you can buy out the government’s stake by paying back 10%, 20% or 100% of the amount they loaned to you, giving you the chance to own 100% of the equity in your home as soon as you can afford to do so.

The buyers funds a minimum of 5% of the deposit, the government will lend buyers up to 20% of the full value of a new build home. The remaining 75% of the purchase price will need to be funded by a mortgage. The lgoverement part of the loan is interest free for the first five years.

What are the key features of the scheme?

  • The scheme is available to all home buyers, not just first-time buyers
  • There is no household income limit
  • You can purchase a new-build property with a maximum value of up to £600,000
  • You will need a minimum 5% deposit to qualify
  • You will need to meet appropriate tests to ensure you can repay the mortgage, as well passing your chosen mortgage lender’s credit and affordability checks
  • The property purchased must be your only residence - you cannot use this scheme for Buy to Let investments. 

Help to Buy Mortgage Guarantee Scheme

‘Help to Buy’ has been making headlines recently with the early launch of the Mortgage Guarantee strand of the scheme, which was originally not due to be introduced until the beginning of 2014.

Already, lenders have started to take applications for mortgages that are subject to the Mortgage Guarantee assistance from the government, and if you have been struggling to buy a property in recent months, that may mean a new home is now within your grasp.

This element of the scheme allows buyers to purchase new-build and existing property anywhere in the UK with a deposit of just 5%.

Government backing guarantees a portion of the rest of your borrowing, effectively reducing the risk faced by the lender when they approve the loan.

You can borrow on properties worth up to £600,000, they must be your primary residence (i.e. not a rental or ‘buy to let’ home) and you must have no history of debt problems.

The Help to Buy Mortgage Guarantee scheme can help you buy a newly built home or an existing property with a deposit of as little as 5%. This scheme is not administered via Help to Buy Agents, you must contact participating lenders directly for more information.

How it works

The scheme works by offering lenders the option to purchase a guarantee on mortgages where a borrower has a deposit of between 5% and 20%.


To qualify for this scheme, you must pass lender affordability checks and have no history of difficulties in meeting debt payments.

In order for your mortgage to be eligible for the mortgage guarantee scheme:

  • it must be a residential mortgage, so you will be planning to live in your house and not rent it out;
  • the property you want to buy must be in the UK and the purchase value must be £600,000 or less;
  • the mortgage must be taken out on a repayment basis, rather than interest-only;
  • the mortgage must be to buy your only property, so you cannot have an interest in any property, anywhere in the world; and
  • the mortgage cannot be for a shared equity or shared ownership purchase. 

Other Options

While the two options described above are the current major components of Help to Buy, there are other options too – shared ownership schemes and the NewBuy initiative, which allows new-build properties to be purchased with just a 5% deposit are two alternatives.

If you live in a council-owned property, you may also have the right to buy it at a favourable price, while social housing schemes and no-deposit or shared equity offers from housing developers are also means of improving the affordability of property, particularly for first-time buyers.

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