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Help to Buy equity loan scheme

This content applies to England

The Help to Buy equity loan scheme was launched in April 2013 to provide equity loan assistance to buyers of new-build homes in England.

The scheme replaces FirstBuy equity loans and will run until 2020, unless funds are exhausted before then.

How the scheme works

The Help to Buy scheme offers financial assistance to buyers of new-build homes in the form of an equity loan of up to 20 per cent of the value of the property (increased to 40 per cent in London from 1 February 2016). The maximum purchase price is £600,000. The scheme only applies to new homes on newly built developments. The loan is financed by the UK Government through the Homes and Communities Agency (HCA).

The buyer must cover a minimum of 80 per cent of the purchase price (60 per cent in London) with a mortgage and cash deposit. The deposit is not a requirement for participation in the scheme, but most mortgage lenders require buyers to contribute a deposit of at least five per cent. The mortgage must be a conventional, first-charge, capital repayment mortgage and be with a qualifying lending institution (ie a bank or building society). Purchases must be approved by a local Help to Buy agent (see How to apply below).

The loan is interest free for the first five years. In the sixth year the buyer must pay a fee of 1.75% of the value of the loan. This fee will rise annually by the increase (if any) in the Retail Price Index (RPI) plus one per cent. The equity loan must be repaid within 25 years, or earlier if the property is sold.

The HCA is entitled to a share of the future sale proceeds equal to the percentage contribution made towards the purchase price. This entitlement is secured through a second charge on the home, in the same way that the mortgage is secured through a first charge.

Help to Buy homes are available from house builders registered with the scheme.

Who can apply

Anyone wanting to buy a new-build home can apply to the Help to Buy scheme, as long as they can fund up to 80 per cent of the purchase price of their selected property (through a conventional first-charge mortgage, plus a deposit if required by the lender). The maximum purchase price is £600,000.

The scheme is available to first-time buyers or home movers, but the new property must be the buyer's only residence once the purchase has completed. Assistance is not available to buy a second home nor for buy-to-let investors.

How to apply

Once the buyer has identified the home they want to buy (through a registered house builder), s/he must complete a Help to Buy Property Information Form (available from the developer) and reserve the property with the house builder. There will usually be a reservation fee to do this. The Property Information Form and a copy of the house builder's reservation form must be sent to the local Help to Buy agent.

The Help to Buy agent will check that the buyer can afford the proposed mortgage. If it is deemed affordable, the agent will issue an 'authority to proceed' within four days of submission of the Property Information Form and reservation form.

At this point the buyer will need to instruct a solicitor to act for them and make a full mortgage application (through an independent financial advisor).

The Help to Buy loan contribution is made direct to the house builder at the time of completion.

Selling a property bought through the Help to Buy scheme

When the property is sold, the seller must pay back to the HCA a percentage of the proceeds of the sale equal to the initial equity loan (unless the loan has already been repaid). This means that if the equity loan was for 20 per cent of the purchase price of the home, the seller must repay 20 per cent of the proceeds of the sale.


The buyer/owner of the property can choose to make voluntary part (or full) repayments of the Help to Buy equity loan at any time. This is known as 'staircasing'. The minimum repayment is 10 per cent of the market value of the property at the time of repayment.

The amount required to increase the buyer's equity share will depend on the value of the property at the time of repayment. As the home increases (or decreases) in value, so the amount required for repayment will increase (or decrease).

Further information

Further information about the Help to Buy scheme is available on the Help to Buy website or from For buyers in London, see the London Help to Buy website.


The information on this page applies only to England. Go to Shelter Cymru for information relating to Wales.

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