Help To Buy Explained

Help to Buy Explained

The new Help to Buy: Equity Loan scheme was launched on 1 April 2021.  View Homebuyers’ Guide Here 

It is for first-time buyers and includes regional property price limits to ensure the scheme reaches people who need it most.

The new scheme will run until March 2023. As with the previous scheme, the government will lend homebuyers up to 20% of the cost of a newly built home, and up to 40% in London.

The previous Help to Buy: Equity Loan scheme ran until March 2021.

Help to Buy Overview

  • Deposit required: At least 5% of the price of the home.
  • Ownership: Full ownership. Government has an equity share up of to 20% (up to 40% in London), until you repay the equity loan.
  • Headline benefits: Enables people to buy a new-build property with a small deposit.
  • Headline requirements: Homebuyers must contribute 80% of the home’s price, for example, with a minimum 5% deposit and up to 75% mortgage. In London, homebuyers must contribute at least 60% of the home’s price.

To help first-time homebuyers into home ownership who are unable to access affordable loan to value mortgages due to having insufficient deposit funds available.

First-time homebuyers over the age of 18 years buying a home in England

To apply, you must be:

  • aged 18 or older
  • a first-time buyer

You cannot:

  • own a home or land anywhere in the world now or in the past
  • have had any form of sharia mortgage finance
  • own a home bought with other people or inherited
  • be married or in a co-habiting relationship, either now or on legal completion with anyone who owns or has owned a home or land anywhere in the world
  • buy a second home

If you’re married or in a co-habiting relationship, you’ll have to make a joint application with your spouse or civil partner and both live in the home having it as your only residence.

There are price limits on homes you can buy with an equity loan. The limit is different for each region in England.

First-time homebuyers buying a new build home from a Help to Buy registered homebuilder.

Help to Buy: Equity Loan (2021-2023)

If you’re a first-time buyer in England, you can apply for a Help to Buy: Equity Loan.

This is a loan from the government that you put towards the cost of buying a newly built home.

You can borrow a minimum of 5% and up to a maximum of 20% (40% in London) of the full purchase price of a new-build home.

You must buy your home from a homebuilder registered for Help to Buy: Equity Loan.

The amount you pay for a home depends on where in England you buy it.

Help to Buy: Equity Loan price caps – April 2021 to March 2023

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


The equity loan, the deposit you have saved, and your repayment mortgage cover the total cost of buying your newly built home.

The percentage you borrow is based on the market value of your home when you buy it.

You do not pay interest on the equity loan for the first 5 years. You start to pay interest in year 6, on the equity loan amount you borrowed.

The equity loan payments are interest only, so you do not reduce the amount you owe.

You can repay all or part of your equity loan at any time. A part payment must be at least 10% of what your home is worth at the time of repayment.

Example: for a home with a £200,000 price tag:

Chart showing 75% mortgage - £150k, 20% equity loan - £40k and 5% deposit - £10k
75% mortgage = £150k, 20% equity loan = £40k, 5% homebuyers deposit = £10k


Paying back the equity loan

When deciding if an equity loan is right for you, it’s important to consider the full cost of your borrowing:

For the first five 5 years:

  • the equity loan is interest free
  • you pay a £1 monthly management fee by Direct Debit

 From year 6:

  • pay the £1 monthly management fee
  • pay monthly interest fee of 1.75% of the equity loan
  • interest rate will rise each year in April by the Consumer Price Index (CPI), plus 2%
  • continue to pay interest until you repay your loan in full

When you take out your equity loan, you agree to repay it in full, plus interest and management fees.

You must repay your equity loan in full:

  • at the end of the equity loan term
  • when you pay off your repayment mortgage
  • when you sell your home
  • if you do not follow the terms set out in the equity loan contract and we ask you to repay the loan in full

The amount you pay back is worked out as a percentage of the market value at the time you choose to repay.

If the market value of your home rises, so does the amount you owe on your equity loan. And if the value of your home falls, the amount you owe on your equity loan falls too.

Please go to our homebuyers’ guide for more information on how to repay your Help to Buy: Equity Loan.

Help to buy - Premier Financial Group
Found your home, now lets find your mortgages - PFG Mortgages - Premier Financial Group

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