9th June 2020

Help to Buy – Everything You Need to Know

In this article, we tell you everything you need to know about the government’s Help-to-Buy Scheme in the UK. We discuss the pros and cons of each option, providing you with eligibility criteria alongside all the information you need to decide which option is best for you. 

After looking into the Help-to-Buy Schemes in England we’ll then go on to explore the options that are available to those living in Wales, Scotland and Northern Ireland. 

What is the Help-to-Buy Scheme? 

There are various different Help to Buy schemes currently available in England. All of which have been designed by the government with the aim of giving everyone a chance to buy their own home. These schemes include the Help-to-Buy: Equity Loan scheme, Help-to-Buy: ISA scheme and the Help to Buy: Shared Ownership scheme.

In this section we provide information about these 3 options, giving you all the information you need to decide which scheme is most suitable for you.  

Help to Buy: Equity Loan

The Help-to-Buy Equity Loan Scheme is suitable for First-time Buyers and Homeowners looking to move (First time buyers only from 1st April 2021). This scheme is run by government-appointed Help to Buy agents who can provide you with all the relevant information and guidance you’ll need when applying for the Help to Buy: Equity Loan scheme. To find your nearest Help-to-Buy agent, simply click on the link below that matches your geographical location: 

The Help to Buy scheme is not to be confused with the ‘Right to Buy’ scheme which is still running in England and Northern Ireland. 

How Does the Help-to-Buy Equity Loan Scheme Work? 

With the government’s Help-to-Buy Equity Loan Scheme, the Government lends you up to 20% (40% in London) of the cost of a home. 

  • During the first 5 years of owning the home, you will not be charged any fees on the 20% (40% in London) of the loan. 
  • You only need a 5% cash deposit and a 75% mortgage, which gives you access to lower rates than if you went with a 95% mortgage.

To find out more, get in touch with a Government-appointed Help to Buy agent who’ll be able to advise you further. 

Help to Buy: ISA 

The Help to Buy ISA is an ideal option for first time buyers wanting to save up for a mortgage. Applications for this scheme closed in November 2019, however if you opened an account before this date, you’ll be able to carry on saving into your account until November 2029. 

How Does the Help-to-Buy ISA Work? 

With the Help-to-Buy ISA you can save up to £200 a month and for every £200 you save, you will receive £50 (a 25% bonus). The details of the account are as follows: 

  • An initial deposit of £1,200 is required to open the account.
  • To be eligible for the government bonus, you’ll need a minimum saving total of £1,600.
  • The maximum government bonus is £3,000.
  • Purchase price up to £250,000 (£450,000 in London).
  • Can be used for the purchase of both new builds and existing properties.

To find out how to apply and to find out how much you could be eligible for, head over to the government’s webpage for the Help-to-Buy ISA.

If you missed the deadline to apply for a Help-to-Buy ISA, a good alternative option would be a LISA (Lifetime Help to Buy ISA). The details for this option are as follows: 

  • Available to those under 40 years of age. 
  • Allows you to save up to £4,000 per year.
  • The government tops up 25%  (maximum £1,000 per year).
  • Can be used to buy a first home or for retirement.
  • For first time buyers, the maximum property value is £450,000.

See the government’s Lifetime ISA page for more information. 

Help to Buy: Shared Ownership 

The government’s shared ownership scheme is also great for first time buyers, those over the age of 55 and families with a household income below £80,000.

How Does the Help-to-Buy Shared Ownership Scheme Work? 

This option offers a mix of both buying and renting, as you typically buy between 25% and 75% of the property’s value and pay rent on the rest. 

  • The scheme is available in England only and any family with an income of less than £80,000 (£90,000 in London) can apply.
  • As well as first-time buyers, this option is also available to previous homeowners who can’t afford to buy a house now and those who are already shared owners and are looking to move.
  • This scheme can be used for both new builds and existing builds via a resale programme from housing associations. 
  • The properties are always leasehold.
  • If you’re aged 55+ and have bought the maximum share of the property (75%), you will not be required to pay rent on the rest. 

More information and details of how to apply can be accessed here.

Is the Help-to-Buy Scheme Available in Scotland? 

Scotland has a range of initiatives in place in order to help first time buyers and existing homeowners to buy a house of their own. These include the First Home Fund, the Low-cost initiative for First Time Buyers (LIFT), NSSE (New Supply Shared Equity) scheme and of course Help to Buy Scotland. 

What is the First Home Fund in Scotland? 

The First Home Fund is a shared equity scheme available to First Time Buyers. Here are the main features of this scheme:

  • This scheme entitles first-time buyers to receive up to £25,000 contribution (capped at 49%) of the cost of a new home. This can be either a New Build or existing property. 
  • Your mortgage must be at least 25% of purchase price and a 5% cash deposit is required from the buyer. 
  • You do not have to pay monthly repayments or interest to the Scottish government for their contribution. Instead, you can increase your equity share overtime or alternatively repay the funds to the government when you come to sell the property. 

Application guides for this scheme can be found here

What is Scotland’s Low-cost initiative for First Time Buyers (LIFT)?

The Scottish Government’s LIFT scheme started in 2007 and has since helped thousands of first time buyers to get onto the property ladder. There are two different LIFT schemes available, the OMSE and the NSSE. 

How does Scotland’s Open-Market Shared Equity Initiative Work?

  • The OMSE (Open-Market Shared Equity) scheme enables you to buy any home for sale on the open market within certain price thresholds
  • In this scheme, you pay for the largest share of the total cost of the property, usually between 60% and 90%. The Scottish Government will then have equity of remainder under a shared equity agreement with you. 
  • To qualify, you’ll need to be able to prove that you cannot afford to buy a home that meets your needs without OSME. Your eligibility will then be assessed by the organisation who administers the scheme in your area.

To apply for this scheme simply contact the administering agent. Details of how to do this can be found on the government website here

How does Scotland’s New Supply Shared Equity Scheme Work?

The NSSE (New Supply Shared Equity) scheme in Scotland is designed to help first time buyers purchase  new build properties from the council or housing association. 

  • This scheme is also available to previous homeowners with a significant change in their circumstances (for instance, a marriage breakdown). 
  • Your local council or social landlord will assess your eligibility for this scheme. To apply, you must be able to demonstrate that you cannot afford a home without the NSSE.

Instructions for how to apply for Scotland’s New Supply Equity Scheme can be found here

Help to Buy Scotland

The Help to Buy scheme in Scotland is a great opportunity for first time buyers and for those who already own a home. Details of the scheme are as follows: 

  • You must be able to put down a mortgage and deposit that accounts for a minimum of 85% of the property’s total purchase price. The Scottish Government will hold the remainder share under a shared equity agreement.
  • This initiative can be used when purchasing new build properties only.
  • As well as first-time buyers, existing homeowners may also be eligible for the scheme as long as they do not already own a second home.
  • The maximum purchase price is £200,000 until April 2021.
  • Your mortgage must not be more than 4.5 times your income or 3.5 times your income if you’re a couple. 

Instructions on how to apply for the Help to Buy Scheme in Scotland can be found here

Is the Help-to-Buy Scheme Available in Wales? 

In Wales, two options are available for those who are struggling to afford to buy their own homes. These consist of Help to Buy Wales and Rent to Own Wales. 

What is Help to Buy Wales and How Does it Work?

The Help to Buy Scheme in Wales is a shared equity scheme that provides support to both first time buyers and existing homeowners who cannot otherwise afford to buy a home. 

  • The scheme applies to new build homes only and can be used on purchases up to the value of £300,000.
  • A 5% deposit is required.
  • The government provides you with a 20% shared equity loan. A mortgage is required for rest. 

For details of how to apply for the Help to Buy scheme in Wales, head over to the government website where they take you through a step by step guide. 

What is the Rent to Own Scheme in Wales and How Does it Work?

The Rent to Own Scheme is designed to help tenants of rental properties in Wales to save up for a deposit for a mortgage whilst renting. 

  • The initiative provides you with the opportunity to buy the home you’re renting.
  • You can receive 25% of the rent you paid over 5 years back as a deposit to put down on a mortgage.
  • You can also receive 50% of the increase in the property value during the period of time you have rented the property. 
  • The agreement lasts for up to 5 years. You can apply to buy your home at any point between the end of the second year and the end of the 5 year agreement.

More information about the Rent to Own scheme in Wales and details of how to apply can be found here

Is the Help-to-Buy Scheme Available in Northern Ireland? 

There are a few schemes available in Northern Ireland for those who are thinking about buying a home in the near future. These include the Co-Ownership Scheme and the Rent-to-Own Scheme. 

What is the Co-Ownership Scheme in Northern Ireland?

The Co-Ownership initiative is suitable for those who can’t afford to buy 100% of a property. It allows you to own a share of the property, whilst renting the remainder form your housing association. 

  • In this scheme, you buy a share of a house and pay rent in order to co-own the rest (50-90%). 
  • You have the ability to increase your share whenever you like. 
  • The scheme is open to first time buyers and previous owners, however  people who currently own a property are not eligible for this scheme. 

To find out how to apply, see the government’s co-ownership webpage here

What is Rent-to-Own Northern Ireland?

A Rent-to-Own scheme is also available in Northern Ireland which offers a fixed-term tenancy with an option to purchase the property at the end of the tenancy agreement. 

  • This scheme is for New builds with a value of up to £160,000
  • It allows you to rent for up to 3 years
  • You will then receive a 20% refund on rent at the end of tenancy to go towards a deposit.

For instructions on how to apply for the Rent to Own scheme in Northern Ireland, head over to the dedicated co-ownership webpage here

We hope this article was useful in providing you with everything you need to know about the Help to Buy scheme in England, Northern Ireland, Scotland and Wales. 

If you’re thinking of buying a house and would like to find out more, head over to our Mortgage section for all the latest hints and tips to help you climb the property ladder.

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