Dwell Well > Moving > Help to Buy Schemes (for first time buyers and home movers)

Help to Buy Schemes (for first time buyers and home movers)

Schemes to help you buy a home in the UK. 

Unfortunately, not all UK residents can afford to buy their first home or move as their needs change without help. If you are flexible and really want to be able to buy a home, it is possible

There are now a number of Help to Buy options available, so find out more from our overview of three of the most popular government schemes to help first time buyers as well as home movers.

Scheme no 1 the 'Help to Buy ISA' (available to new savers until 30 Nov 2019)

Suitable if:

  1. You are 16 or over
  2. Have a valid National Insurance number
  3. You are a UK resident
  4. You are a first time buyer, and not own a property anywhere else in the world.

This scheme allows you to save for your first home and if you meet the following criteria the government pays you a bonus towards your savings. (So, if you save £12,000, the government bonus could be £3000, giving you £15,000 towards your first property)

To qualify for the government bonus, the property you are buying must:

  • Be in the UK
  • Have a purchase price of up to £250,000 (or up to £450,000 in London)
  • Be the only home you will own
  • Be where you intend on living
  • Be purchased with a mortgage

How it works

  • You save up to £200 a month in your Help to Buy ISA. (In the first month you can deposit a lump sum up to £1,200.)
  • The government pays you a bonus of 25% on what you save up to a maximum of £50 a month.
  • The ISA is available to each first-time buyer, not each household. This means that if you are planning to buy with your partner, for example, you could receive a government bonus of up to £6,000 towards your first home.
  • The minimum government bonus is £400, meaning that you need to have saved at least £1,600 into your Help to Buy ISA before you can claim your bonus. The maximum government bonus you can receive is £3,000 – to receive that, you need to have saved £12,000.

And importantly with an ISA, you are not restricted to buying a new build home or an existing property being sold through resale programmes from housing associations.

  • The Help to Buy ISA is available from a range of banks, building societies and credit unions. But, this ISA will no longer be available after 30 November 2019. 

Open your account now before its too late.

Scheme no 2 the 'Help to Buy Equity Loan'

 Suitable if:

  1. You want to buy a new build home up to a maximum of £600,000
  2. You are a first-time buyer or
  3. You are currently a homeowner who wants to move to a new build and you must not own any other property at the time you buy your new home with a Help to Buy: Equity Loan. You won’t be able to sublet this home or enter a part exchange deal on your old home. So, you need to sell your current home to qualify.

This scheme is available in England only. The Scottish Government, Welsh Government and Northern Ireland Housing Executive run similar schemes – check out their websites.

How it works

  • With a Help to Buy Equity Loan the Government lends you up to 20% of the cost of your newly built home, so you’ll only need a 5% cash deposit and a 75% mortgage to make up the rest.
  • You won’t be charged loan fees on the 20% loan for the first five years of owning your home.
  • But you have to purchase a new build home. (See our article on buying a new build property for the pros and cons of new build homes).
  • The maximum equity loan you can borrow is £120,000 (£240,000 in London)
  • There is no minimum amount
  • Buyers must be able to provide a minimum deposit of 5% of the total value of the property
  • You must also have secured a loan with an authorised lender (bank or building society) for the remaining mortgage.
  • There is a monthly fee of £1 until the loan is repaid
  • After 5 years, you have to pay interest and charges on the equity loan
  • When you sell the property, you have to pay the equity loan back. The percentage you borrowed or outstanding has to be repaid and is linked to the selling price of the property not the price you purchased at. (So, if your property has increased in value, you will pay back more)
  • You can make lump sum payments in the first 5 years, but these must be a minimum of 10% of the market value of the property at the time of repayment.
  • You can also repay the equity loan in full at any time.
  • If you repay the equity loan before the 5-year period has ended, you will not pay any interest on the loan.

To qualify for the Help to Buy equity Loan:

  • You must have a 5% deposit of the total purchase price
  • Be purchasing a new build home
  • The property being purchased is no more than £600,000
  • Have a first charge mortgage agreed with a qualifying lender
  • Help to Buy buyers outside London must be able to fund up to 80% of their selected property through a conventional mortgage and deposit. (60% in London)
  • The Local Help to Buy Agent will carry out an assessment of your application to ensure that you are in a position to afford a conventional mortgage for the proposed purchase.
  • You cannot use this scheme if you require a mortgage more than 4.5 times your household income.
  • The property purchased must be your only residence and this scheme is not for buy to let properties.

Scheme no 3 the 'Help to Buy Shared Ownership'

Suitable if:

  • You are a first-time buyer, you used to own a home but can’t afford to buy one now or are an existing shared owner looking to move.
  • You can’t afford the mortgage on 100% of a home, Help to Buy Shared Ownership offers you the chance to buy a share of your home (between 25% and 75% of the home’s value) and pay rent on the remaining share.
  • You can purchase more shares when you are in a position to do so, and own more or all of your home in the future
  • Your household earns £80,000 a year or less (£90,000 a year or less in London)

How it works

  • This scheme is only available to purchase a newly built home or an existing one through resale programmes from housing associations.
  • You’ll need to take out a mortgage to pay for your share of the home’s purchase price, or fund this through savings.
  • Shared Ownership properties are always leasehold.
  • To buy a home through a Help to Buy Shared Ownership scheme contact the Help to Buy agent in the area you want to live.
  • As with any property purchased regardless of how it is funded, service charges may be payable on leasehold properties, particularly flats and apartments. These would be your responsibility on shared ownership

For more information on the above schemes, we recommend you visit the government website. You can also access their Find your scheme , enter your details and see which schemes are available or suitable for you.

Help to Buy - summary considerations

  • If you are a first-time buyer, you may qualify for all schemes and could potentially access more than one scheme.
  • Help to Buy ISA can be used to purchase the home of your choice (subject to mortgage and lenders eligibility)
  • Help to Buy Equity Loan can only be used to purchase a new build property
  • Help to Buy Equity Loan, unless repaid in the first 5 years, could be a long-term loan with interest and charges. It also has to be repaid at some time in the future. But this option enables affordability, especially for those who may otherwise not be able to afford a standard mortgage or meet lenders income requirements.
  • Help to Buy Shared Ownership can only be used to purchase a new build home or property from an eligible housing association.
  • Help to Buy Shared Ownership could mean you continue to pay rent even when you have repaid your mortgage.
  • Help to Buy Shared Ownership is ideal if you could not otherwise afford the property prices in the area you want to live

We always recommend professional and financial advice when borrowing money or buying a home (well we would, wouldn’t we!) and you can access qualified mortgage brokers here

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