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Help to buy

By Thu, October 14 2021 2:20 BSTNo Comments


It is now closed to new applications, except in Wales. You could apply to the scheme in England until 31 October 2022 and home purchases must have been completed by 31 March 2023.

How Help to Buy works

The Help to Buy scheme offers an equity loan where the government lends first-time buyers in Wales money to buy a newly built home.

This must be used to buy your main residence, and can’t be used to buy a second home or a buy-to-let property.

You need a deposit of at least 5% of the purchase price.

You can borrow 20% of the purchase price. This amount is interest-free for five years.

The maximum purchase price for a Help to Buy property is £300,000.

You can’t use Help to Buy to buy a property above this limit.

Help to Buy logo

Help to Buy is available subject to eligibility, terms and conditions. Find out more at Own Your HomeOpens in a new window

Mortgage affordability calculator

To work out your monthly repayments and whether you can meet them, use our Mortgage affordability calculator

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National differences

Northern Ireland has a different equity-sharing scheme called Co-OwnershipOpens in a new window a not-for-profit organisation to help people become homeowners.

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How to pay back your loan

An example of how the Help to Buy equity loan works

Cost of home – £200,000
Cost name Percentage of total Value

Your deposit



Equity loan









Interest rates for paying back your interest-free loan

When the interest-free period ends, the interest rates charged on your loan will go up each year in April by the Consumer Price Index (CPI), plus 2%.

Years 1-5: no fees
Year 6: 1.75% of the loan
Year 7 onwards: 1.75% + CPI + 2% (1% if you took the equity loan before December 2019).

You will also pay a £1 monthly management fee by direct debit. When you take out your equity loan, you agree to repay it in full, plus interest and management fees.

An example showing typical interest rate rises on your government loan

Year Interest rate


No interest payments


No interest payments


No interest payments


No interest payments


No interest payments







The figures above assumes CPI is constant at 2% and no reduction in the loan amount.

From the table, your first interest payment will be 1.75% of the amount you borrowed.

Your interest will go up each year in April by the CPI, plus 2%. This is worked out by multiplying the loan amount (purchase price x equity loan percentage). The equity loan percentage will reduce if any part repayments are made.

The interest rate increases every year by adding CPI plus 2%. The interest rate from the previous year is then used to work out the interest rate rise for the following year.

For example, the following shows how any interest rate increase is calculated assuming CPI remains constant at 2% and no payments are made to pay off the government loan:

1.75% (the rate in year 6) + 0.07% (1.75% x (0.02 CPI + 0.02) = 1.82%

1.83% (the rate in year 7) + 0.07% (1.83% x (0.02 CPI + 0.02) = 1.90%

When you sell your home

When you sell your home, or the mortgage is paid off, you have to repay the equity loan plus a share of any increase in the value.

An example of how it works when you sell your home

Home bought for £200,000, sold for £250,000

Increase in value


Equity loan repayment

£50,000 (£40,000 + 25% profit)


£150,000 (less capital repayments)

Your share

at least £50,000

The remaining £50,000 (or more) can be used as a deposit on your next home.

The exact amount depends on how much you’ve paid off your mortgage.

You can also pay back part or all of your loan at any time.

The minimum percentage you can pay back is 10% of the market value of your home.

The amount you pay will depend on the market value at the time.

For more information about Help to Buy frequently asked questions, including what to do if you want to remortgage visit Help to Buy schemes-faqs
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More information

Find out more in our guides:
How much can you afford to borrow for a mortgage?
The cost of buying a house and moving
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This article is provided by the MoneyHelper.