Government schemes for first time buyers

There are a range of government schemes available to help first time buyers get on the property ladder, including the Shared Ownership and Help to Buy Equity Loan schemes.

In this section, we will look at how the various government schemes for first time buyers work, and explain who is eligible to apply.

Help to Buy ISAs & ISA rates

The Help to Buy ISA is a type of savings account designed to help first time buyers build up a deposit.

First time buyers aged 16 or over were able to save up to £1,200 into a Help to Buy ISA in the first month after opening the account, followed by a maximum monthly contribution of £200.

The big advantage of the Help to Buy ISA is that the government tops up any contributions you make into the account by 25%.

So, if you pay £200, the government will top this up to £250. The maximum the government will give you is £3,000, and you’d need to save £12,000 to get this. The returns you’ll receive vary depending on which provider you go to, so it’s worth doing plenty of research to find the best Help to Buy ISA rates.

Savings held in a Help to Buy ISA can be used to buy a property costing £250,000 or less, or £450,000 or less if you are buying in London.

The Help to Buy ISA is different from the Lifetime ISA (LISA), which is available to anyone aged from 18 up to 40, who wants to buy their first home or save for retirement, or both. You can save up to £4,000 into a LISA each year, and the government will again top up any contributions you make by 25%.

Savings held in a Lifetime ISA can be used to buy a first home costing up to £450,000 anywhere in the UK.

If you have both a Help to Buy and a Lifetime ISA, you can only use the government bonus from one of these accounts to buy a property.

Help to Buy ISA accounts closed to new savers on 30th November 2019. If you already have an account, you can keep saving into the ISA until 30th November 2029, after which additional contributions will no longer be allowed. You must claim the bonus by 1st December 2030.

Shared ownership mortgages

The Shared Ownership scheme enables you to buy a share of a property and pay rent on the remaining part, with an option to buy a bigger share later.

Under the scheme, you can buy between 25% and 75% of the property’s value. You can then buy further shares in future when you are able to.

You can qualify for Shared Ownership if your household earns £80,000 a year or less outside London. This rises to £90,000 if you live in the capital.

You must be a first time buyer, or have previously owned a property but now can’t afford to buy one, or you already own a share in your home but want to move. You’ll need to take out a Shared Ownership mortgage to pay for your share of the property.

Help to Buy equity loan

The Help to Buy equity loan is available to first time buyers and those looking to move up the property ladder who only have a deposit of 5% to put down.

Rather than taking out a mortgage for the remaining 95% of the property value, the government lends you 20% of the property price, and so you only need a mortgage for the remaining 75%.

If you’re buying a property in London, the government will lend you up to 40% of the property price. Once your 5% deposit is factored in, that means you only need a mortgage for 55% of the property value.

The government equity loan is interest-free for the first five years. After that there is an annual charge of 1.75% which rises every year by the rate of inflation, plus another 1%. The loan must be repaid either when you sell the property, or when you pay off the mortgage.

You can only apply for a Help to Buy equity loan if the property you are buying is new-build and has a maximum purchase price of £600,000. The loan can only be used to buy your main home, and not a Buy to Let property.

These rules only apply to properties in England. You can find out more here.

Scotland, Wales and Northern Ireland run similar schemes. You can find out more about how these work here:

• Scotland:

• Wales:

• Northern Ireland:

The Help to Buy equity loan scheme will finish in March 2021. However, the government announced in the 2018 Autumn Budget that it would be replaced by a new equity loan scheme, designed for first time buyers only.

The new scheme will work in the same way as the current equity loan scheme, except that the maximum value of properties homebuyers can purchase will be subject to new regional price caps, shown below.

New Help to Buy regional property price caps

(Price cap for properties eligible for Help to Buy Equity Loan scheme from April 2021 to March 2023)

Region Cap

North East £186,100
North West £224,400
Yorkshire and The Humber £228,100
East Midlands £261,900
West Midlands £255,600
East of England £407,400
London £600,000
South East £437,600
South West £349,000

Source: HM Treasury analysis

Like the current scheme, the government will lend up to 20% of the property price interest-free for the first five years, with the same rate of interest payable after this. The new scheme will finish in March 2023 and there are currently no plans to introduce a further equity loan scheme after this date.

Help to Buy equity loan mortgages

Most lenders offer Help to Buy mortgages so it's worth comparing a wide range of deals to find the best mortgage for you.

If you want to apply for a Help to Buy equity loan mortgage, our expert mortgage advisers will be happy to answer any questions you have. There's no charge for our service, and we will guide you through the process from start to finish.

You can find out more about equity loan mortgages here

Help to buy equity loan repayment

You don’t have to pay any interest on your Help to Buy Equity loan for the first five years, and the loan only needs to be repaid when your property is sold, or at the end of your mortgage term - whichever happens first.

Paying back your Help to Buy equity loan early

There are a number of reasons you may wish to pay back your Help to Buy equity loan early, the most common being you want to own your property outright. You do have the option to pay back some or all of the loan before the five-year interest-free period runs out (and you start to accrue interest on the loan). However, there are limitations to this.


Before the five-year interest free period ends, you don’t have the option of chipping away at the loan with monthly payments. You can either clear the whole loan in one go, or you can make a partial repayment, but this must be for a minimum of 10% of the property’s current value. This is known as “staircasing”.

So, if your entire equity loan is the minimum 10% of the property value, then you will have to pay back the full 10% in one go. If your equity loan is 20% of the property value, you have the option of paying it back in two 10% chunks, or one 20% payment.

Independent Property Valuation

To work out exactly how much you’ll need to repay, you’ll first need to have the property independently valued by a surveyor. You can find a surveyor near you using the RICS website. Be aware that you will have to pay for this valuation (the cost varies depending on the size of your property), and it’s only valid for three months.


By paying off your equity loan early, you are buying back equity in your property. So just like a property purchase, you’ll need to enlist the services of a solicitor to handle your conveyancing. There may also be an administration fee to pay. This is usually around £200 which is payable when you pay back your Help to Buy equity loan, or if you repay part of it.

Mortgage guarantee scheme

The Help to Buy mortgage guarantee scheme helped first time buyers with only a small deposit to get a mortgage.

This part of Help to Buy finished on 31 December 2016, so is no longer available.

Both first time buyers and homeowners looking to move up the property were eligible for the scheme. Those who applied for the scheme before it ended only had to put down a 5% deposit. Lenders were then able to buy a guarantee from the government which would compensate them if borrowers belonging to the scheme failed to make their mortgage payments.

As a result, lenders offered a wider range of mortgages for those needing to borrow up to 95% of the property value.

Although this part of the scheme has now finished, many lenders continue to offer 95% mortgages, even without the government guarantee. Seek advice if you’re not sure which type of mortgage is likely to suit your needs.

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