Help to Buy was a UK government scheme designed to help first-time buyers purchase a new-build property. Under the scheme, the government lent buyers up to 20% of the property's purchase price (40% in London) as an equity loan. Combined with a minimum 5% deposit from the buyer, this meant only a 75% (or 55% in London) mortgage was needed from a high-street lender.
The equity loan was interest-free for the first five years. From year six onwards, interest was charged at 1.75%, rising annually by RPI plus 1%. The loan had to be repaid when the property was sold, at the end of the mortgage term, or earlier if the buyer chose to do so. Importantly, the repayment amount was based on the property's market value at the time of repayment, not the original loan amount — so if the property increased in value, the repayment would be higher.
The scheme closed to new applications on 31 October 2022, and the final legal completions took place by 31 March 2023. No replacement scheme has been introduced at the time of writing, though other support mechanisms such as shared ownership and the mortgage guarantee scheme remain available.
If you purchased through Help to Buy and still have the equity loan, you should be aware of the interest charges that apply from year six and consider your repayment options. Remortgaging to repay the equity loan is possible once you have sufficient equity.
In 2021, Katie bought a new-build flat in Manchester for £200,000 using Help to Buy. She put down a 5% deposit (£10,000), the government lent her 20% (£40,000) as an equity loan, and she took a 75% LTV mortgage (£150,000) from a high-street lender. In 2026, the equity loan interest kicks in at 1.75%. Her flat is now worth £230,000 and her equity loan is worth 20% of that — £46,000. Katie is considering remortgaging to repay the equity loan and avoid escalating interest charges.
Key Points
- Help to Buy provided equity loans of up to 20% (40% in London) for new-build purchases
- The scheme closed to new applications in October 2022
- The equity loan was interest-free for five years; interest applies from year six
- Repayment is based on the property's current market value, not the original loan amount
- Existing Help to Buy borrowers should plan for rising interest charges from year six