What Is Help to Buy?
A government equity loan scheme (closed in England 2023, still active in Wales) providing up to 20-40% of a new-build property price interest-free for 5 years.
Definition
Help to Buy was a government equity loan scheme that lent first-time buyers up to 20% of a new-build property's price (40% in London), allowing them to buy with as little as a 5% deposit and a 75% mortgage. In England the scheme closed to new applicants in October 2022 and loans expired in 2023; it remains active in Wales up to 20% on homes costing up to £300,000. The loan is interest-free for the first 5 years; after that, interest is charged at 1.75% rising with the Consumer Price Index (CPI) plus 2%. You repay the same percentage of the property's value when you sell, not the original cash amount, meaning the government shares in house price changes. Alternatives now include the Mortgage Guarantee Scheme and First Homes.
Example
In Wales, a 20% Help to Buy loan on a £220,000 new-build = £44,000 loan. With a 5% deposit (£11,000) you need only a £165,000 mortgage. You repay 20% of the eventual sale price.