How does Help to Buy work?

The Help to Buy scheme was a government equity loan for buyers of new-build homes. The buyer paid a deposit of 5%, the government lent up to 20% of the price, or up to 40% in London, and a repayment mortgage covered the rest. It is closed to new applications in England (GOV.UK, accessed 20 Oct 2026).

Help to Buy is often used as a name for several schemes, including the old Help to Buy ISA and the separate schemes in Wales and Scotland. The equity loan is the one most people mean, and it is the one that still affects existing owners today.

The equity loan is secured as a second charge behind the mortgage, and the buyer owns the whole home. The government's interest is a share of the value, which is why the repayment moves with house prices.

Help to Buy equity loans are interest free for five years. In the sixth year interest starts at 1.75% of the original loan, rising each April by CPI plus 2% for the 2021 to 2023 scheme, or RPI plus 1% for the earlier one. A monthly management fee of £1 also applies (GOV.UK, accessed 20 Oct 2026).

Interest and fees do not reduce the loan. The loan is repaid separately, in full or in part, at any time, and in full on a sale, at the end of the equity loan term or when the mortgage is paid off.

For a worked example, a home bought for £200,000 with a 20% loan has a loan of £40,000; if the home is later worth £250,000, repaying in full costs £50,000 (example figures, not market data). How part repayments and remortgages work is explained on the Help to Buy remortgage page.

The main downsides of Help to Buy are that the repayment rises with the home's value, interest starts after the interest-free period and climbs each year, and new-build homes can be sold at a premium that a later valuation does not support. Changes to the home or the mortgage also need consent (GOV.UK, accessed 20 Oct 2026).

Some owners find their home is worth less than they paid, which lowers the loan repayment but can make a remortgage harder because the deposit is smaller in value. Others in rising markets see the sum owed grow well above the original loan.

Leasehold flats bought under the scheme have also faced issues with ground rent terms and cladding, which can affect both lenders and valuations.

In England the Help to Buy equity loan has been replaced by a mix of other schemes, including shared ownership, First Homes in some areas and the mortgage guarantee scheme for small-deposit loans. Each has its own eligibility rules and price limits, set out on GOV.UK (GOV.UK, accessed 20 Oct 2026).

Wales still runs its own scheme, with applications open until 31 March 2027 according to the Welsh Government. Scotland's Help to Buy schemes are closed, and the LIFT scheme continues for eligible buyers.

How the Welsh scheme works, including the price cap, is set out on the Help to Buy Wales page. Free guidance on all government schemes is available from MoneyHelper.

Whether Help to Buy was worth it depends on what happened to the home's value and how long the loan stayed in place. Buyers who repaid early in a rising market paid back more than they borrowed, but often gained a home they could not otherwise have afforded on a 5% deposit (MoneyHelper, accessed 20 Oct 2026).

Owners who still hold the loan can compare the cost of interest from the sixth year with the cost of repaying through a remortgage. The comparison changes as rates and house prices move, so it is worth repeating at each remortgage date.