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Help to Buy mortgages
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Can you still apply for a help to buy mortgage?
It depends where in the UK you live. Help to Buy Wales is still open for applications, with the scheme extended until 31 2025.
In England you can no longer apply for the Help to Buy scheme, which closed to applicants in October 2022. If you’ve already been accepted into the scheme, you can still apply for a Help to Buy mortgage with your equity loan until 31 March 2023. After this date applicants in England will no longer be able to access their equity loan from Homes England.
In Scotland and Northern Ireland you can no longer apply for the Help to Buy scheme.
Will Help to Buy be extended or come back in the future?
In Wales it was recently extended until March 2025, although there is no indication that the scheme will be reinstated elsewhere in the UK.
There are a number of similar home ownership schemes across the UK, however, as well as specialist mortgages that can help first-time buyers or those struggling to afford to buy a home with a traditional mortgage. See the list of alternatives provided below.
Alternatives to Help to Buy
If getting a mortgage with the help to buy scheme is no longer an option, there are a number of other home ownership schemes available across the UK, as well as some specialist mortgage products that could help you get a foot on the property ladder:
Shared ownership mortgages
Shared ownership is another government backed scheme, but this one is available nationwide. It allows you to buy a percentage of a home (10-75%) and rent the remainder from a housing association. In most cases you can continue to increase ownership when you can afford to, until you own the property outright.
First Homes Scheme (England)
A selection of new build homes are being built in England which will be available at 30% to 50% below market value. This is for first-time buyers with a household income of £80,000 or less (£90,000 in London). Key workers, and those on a low-income, or with links to the area of their chosen property are likely to be prioritised.
Homebuy scheme (Wales)
Available in some parts of Wales, the Homebuy scheme provides an equity loan of around 30% of a new build property’s value, so that you only need to borrow 70% with a mortgage. It’s intended for people who qualify for social housing and can’t afford to carry on living in their current home or are in a home that doesn’t meet their needs.
Rent to buy Scheme (England)
Rent to buy is a home ownership scheme that is available in England providing tenants with reduced rent on new build homes, allowing them more opportunity to save for a deposit to purchase the property later.
It’s known under a variety of names, each with slightly different rules, depending on the area and housing association involved. For example, the London living rent scheme accounts for the higher cost of living in the capital. There is also a very similar scheme in Northern Ireland called rent to own.
LIFT Scheme (Scotland)
The Low Cost Initiative for First-time Buyers (LIFT) in Scotland has two slightly different scheme options, the New Supply Shared Equity (NSSE) scheme and the Open Market Share Equity (OMSE) scheme. Both schemes are open to priority groups, as well as first-time buyers, however.
These are both shared equity schemes, which means they work very similarly to the help to buy scheme. You borrow an equity loan from the government, meaning you won’t need to borrow as much or find such a large deposit to get a mortgage.
Right to buy/ Right to Acquire (England)
The right to buy scheme provides some council tenants the opportunity to buy their rented home at a discount of up to 70%, based on the length of their tenancy and property value. Check your eligibility for the right to buy scheme.
The right to acquire scheme is very similar, but is intended for housing association tenants. The discount is lower than the right to buy scheme, at £9000-£16,000 depending where you live. Check your eligibility for the right to acquire scheme.
Deposit Unlock Scheme
The first non-governmental home ownership scheme, ‘deposit unlock’ was developed by the Home Builders Federation in 2022. Unlike most home ownership schemes, this is also open to home movers, as well as first-time buyers.
This scheme is available across the UK, but there are regional variations in availability and maximum property value. It offers applicants the opportunity to buy a new build home with 5% deposit - rather than the standard 15%.
Guarantor mortgage
Unlike home ownership schemes, getting a guarantor mortgage will depend on having a relative or friend who can help you buy a home. A guarantor often uses their own home to secure your borrowing, and will be liable for any outstanding mortgage repayments - even though they have no claim to the property.
For those with family members who could support them, this is a great way to get onto the property ladder and potentially borrow up to 100% of the cost of your new home.
Family assisted mortgage
There are a couple of more modern mortgage products that allow family members to help you buy your first home:
A family offset mortgage allows you to pay less interest by linking a relatives savings account to your mortgage
A joint borrower sole proprietor (JBSP) mortgage allows someone to share the mortgage repayments with you, without them having any ownership over the home
What is the Help to Buy scheme?
The Help to Buy Scheme Wales is an equity loan scheme for first-time buyers who can buy a new build property with a deposit of just 5%. An equity loan from the government of up to 20% of the property’s value tops up your deposit, so you don’t need to borrow as much or find as large a deposit for your mortgage.
The shared equity loan needs to be repaid within 25 years, but you’re free to pay it off at any point within that period. For the first five years the equity loan is interest-free. From year six onwards, you pay a monthly interest fee of 1.75% of the equity loan. Interest fees rise each year by the Consumer Price Index (CPI), plus 2%.
How do Help to Buy mortgages work?
Once you’ve found a home you want to buy through the Help to Buy scheme and are approved for an equity loan, you can apply for the mortgage you need with a lender. There is no specific mortgage needed - they work in the same way as any other mortgage. It’s just a case of finding a lender willing to accommodate help to buy applicants.
Help to buy mortgage interest rates depend on the mortgage type and your personal circumstances, but different lenders will also be able to offer different rates, so be sure to compare mortgage deals first.
Who is eligible for a Help to Buy mortgage?
You can only apply for a Help to Buy mortgage if you meet the eligibility guidelines for the Help to Buy scheme. You'll also need to satisfy the mortgage provider’s lending criteria and have a good credit rating in order to qualify for a Help to Buy mortgage.
To qualify for the help to buy scheme in Wales you must:
Buy an eligible home, with a maximum price of £250,000 from a builder who is registered with the scheme
Be able to fund at least 80% of the property price through a combination of a repayment mortgage and your combined deposit (your own money plus the equity loan)
Provide a minimum deposit of 5% of the purchase price - although the best help to buy mortgages will be available to those with a larger deposit
Take out a first charge repayment mortgage with a qualifying lender
Not sub-let any part of the house you are buying through the scheme
Not rent your existing home and buy a second home through the scheme
Pros and cons of using the Help to Buy scheme
It helps you to buy a first home when you otherwise wouldn’t be able to afford to
You can buy a home with a deposit of as little as 5% of the property’s value
As you only need a mortgage of 75% or less of the value of the property (also known as 75% LTV - loan to value), you will be able to access more competitive interest rates from mortgage lenders
You don’t have to pay interest on the equity loan for the first five years
You can only buy a new build home, not an existing one, which limits your choice
There’s a limit to how much the property can cost, in Wales this is £250,000
You have to pay interest on the equity loan after five years, and the rate increases each year
How much you repay on the equity loan will depends on the value of the property at the time, so if the price of your home rises, you will pay back more than you borrowed
Help to Buy is a useful, government-backed way to improve your mortgage options and most lenders will be able to help you if you’re after a mortgage using Help to Buy. Although the scheme is coming to an end soon so you'll have to act quickly to take advantage of it. ”Claire Flynn, Senior Content Editor - Mortgages
