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Help to Buy explained

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Getting your foot on the housing ladder - or moving up it - can sometimes be difficult, as many people lack the finances required for a house purchase.

It is fair to say that buying a new home is the biggest purchase people will make in their lives, and in order to stimulate the housing market and help people to achieve their aspirations, the government has launched the Help to Buy initiative.

There are many facets to the scheme, which can provide differing levels of assistance in varying formats, and we have outlined the main routes below with an explanation of how each one works:

Equity Loan

Equity loans are available to both first-time buyers and home movers on new-build homes in England, up to a value of £600,000.

In order to take advantage, you will require a contribution of at least 5% of the property price as a deposit, with the government then providing a loan of up to 20% of the price of the property. You will then need a mortgage of up to 75% to cover the remainder.

You will not be charged loan fees for the first five years of owning your home, with the first instalment of interest added in the sixth year, when a fee of 1.75% of the loan’s value is added.

After this, the fee will increase every year, with the increase calculated using the Retail Prices Index, plus 1%.

You will be required to pay back the loan after 25 years or when you sell your home, depending on which comes earliest, with the amount you pay back depending on the market value at the time.

You can pay back part or all of your loan at any time, with the minimum percentage you are able to pay back being 10% of the market value of the home.

Participating lenders

A number of major lenders are participating in the Help to Buy Equity Loan scheme, each with slightly varying terms, conditions and rates:


Chorley Building Society

Cumbria Building Society

Leeds Building Society



Newbury Building Society



Teachers Building Society


Virgin Money

Mortgage Guarantee

Like the Equity Loan, the Mortgage Guarantee enables you to buy a home with a deposit of 5% of the purchase price and is open to both first-time buyers and home movers for new-build and older homes in the UK with a purchase price up to £600,000.

The guarantee is provided to the mortgage lender by the government, providing the borrower meets a number of criteria.

To qualify for a mortgage guarantee, the home you are buying must have a purchase price of £600,000 or less, cannot be a shared ownership or shared equity purchase, must not be a second home, and cannot be rented out after you buy it.

You do not have to be a first-time buyer to take advantage of the scheme and there is no limit on the level of income, however, you cannot use Help to Buy with any other publicly funded mortgage scheme, or an interest-only mortgage.

Participating lenders

A number of major lenders are participating in the Help to Buy Mortgage guarantee scheme, each with slightly varying terms, conditions and rates:

Aldermore Bank

Bank of Scotland




Al Rayan Bank

Lloyds Bank


Post Office


Ulster Bank

Virgin Money

For more information on the government’s affordable home ownership schemes, visit