There are multiple government schemes available to aid first-time buyers take the first step on the property ladder, including the Shared Ownership and Help to Buy Equity Loan schemes.

Help to Buy ISAs and ISA rates

The Help to Buy ISA is a type of savings account which is intended to help first time buyers build up a deposit.

First-time buyers aged 16 or over were able to save up to £1,200 into a Help to Buy ISA in the first month after opening the account, followed by a maximum monthly contribution of £200.

The big advantage of the Help to Buy ISA is that the government tops up any contribution you make into the account by 25%.

For example, if you pay £200, the government will top this up to £250. The maximum the government will give you is £3,000, and you would need to save £12,000 to gain this. The returns you will receive vary depending on which provider you choose, so it is worth researching carefully to select the best Help to Buy ISA rates.

Savings that are held in a Help to Buy ISA can then be used to buy a property costing £250,000 or less, or £450,000 or less if you are buying in London.

The Help to Buy ISA is different from the Lifetime ISA (LISA), which is available to anyone aged from 18 up to 40, who wants to purchase their first home or save for retirement, or both. You can save up to £4,000 into a LISA each year, and the government will similarly top up any contributions by 25%.

Savings held in a Lifetime ISA can be used to buy a first home costing up to £450,000 anywhere in the UK.

You may only use the savings from one of these accounts should you have both a Help to Buy and a Lifetime ISA.

Shared ownership mortgages

The Shared Ownership scheme enables you to buy a share of a property and pay rent on the remaining part, with an option to buy a bigger share later.

Under this scheme, you can buy anywhere between 25% and 75% of the property’s value. You can then buy further shares in the future should you wish to.

You can qualify for Shared Ownership if your household earns £80,000 a year or less outside of London. This rises to £90,000 if you reside in the capital.

You must, however, be a first-time buyer, and either have previously owned a property but now find yourself unable to afford one or you already own a share in your home but want to move. You will need to take out a Shared Ownership mortgage to pay for your share of the property.

Help to Buy equity loan

The Help to Buy equity loan is available to first-time buyers and those who are looking to move up the property ladder and only have a deposit of 5% to put down.

Instead of taking out a mortgage on the remaining 95% of the property value, the government lends you 20% of the property price, and as a result, you only need a mortgage on the remaining 75%.

If you are purchasing a property in London, the government will lend you up to 40% of the property price. Once the 5% deposit is considered, it means your mortgage will be required for 55% of the property value.

The government equity loan is interest-free for the first five years. After that there is an annual charge of 1.75% which rises every year by the rate of inflation, plus another 1%. The loan must be repaid either when you sell the property or when you pay off the mortgage.

You are only eligible for a Help to Buy equity loan if the property you intend to buy is a new-build and has a maximum purchase price of £600,000. The loan can only be used to buy your main home, and not a Buy to Let property.

The Help to Buy equity loan scheme will finish in March 2021. However, the government announced in the 2018 Autumn Budget that it would be replaced by a new equity loan scheme, designed for first time buyers only.

The new scheme will work in the same way as the current equity loan scheme, except that the maximum value of properties homebuyers can purchase will be subject to new regional price caps, shown below.

New Help to Buy regional property price caps

(Price cap for properties eligible for Help to Buy Equity Loan scheme from April 2021 to March 2023)

Region Cap

North East £186,100
North West £224,400
Yorkshire and The Humber £228,100
East Midlands £261,900
West Midlands £255,600
East of England £407,400
London £600,000
South East £437,600
South West £349,000

Source: HM Treasury analysis

Like the current scheme, the government will lend up to 20% of the property price interest-free for the first five years, with the same rate of interest payable after this. The new scheme will finish in March 2023 and there are currently no plans to introduce a further equity loan scheme after this date.

Help to Buy equity loan repayment

There is no interest on your Help to Buy equity loan for the first five years, and the loan is only required to be repaid when your property is sold, or at the end of your mortgage term – whichever occurs first.

Paying back your Help to Buy equity loan early

There are numerous reasons to want to pay back your Help to Buy equity loan early – namely that you want to own your property outright. You do, however, have the option to pay back some or all of the loan before the five-year interest-free period ends (and then you start to accrue interest on the loan). Nonetheless, there are limitations to this.


During the five-year interest-free period, you are unable to chip away at the loan with manageable monthly payments. You can either clear the whole loan at once or make a partial repayment, but tis must be for a minimum of 10% of the property’s present value. This is known as ‘staircasing.’

If the entirety of your equity loan is the minimum 10% of the property value then you will have to pay back the 10% in one go. Nevertheless, if your equity loan is 20% of the property value you retain the option to pay it back in two 10% chunks, or one 20% payment.

Independent Property Valuation

To work out specifically how much you will need to repay you will be required to have the property independently valued by a surveyor. You can find a local surveyor using the RICS website. Be aware that you will have to pay for this valuation (the cost varies depending on the size of your property) and it is only valid for three months.


If you choose to pay of your equity loan early it enables you to gain the equity in your property. Similar to a property purchase, you will need to enlist the services of a solicitor to complete your conveyancing. This may include an administration fee which is usually around £200, and is payable when you pay back your Help to Buy equity loan, or if you repay a portion of it.

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