The end of Help to Buy: what this means for first-time homebuyers

09th Feb, 2022

The end of Help to Buy: what this means for first-time homebuyers

The UK government has announced earlier this month that the Help to Buy subsidy scheme is set to end in March 2023. This may be unlucky news for some, especially if you’re a first-time homebuyer looking to get on the property ladder.

Over 328,506 households have now purchased a home using the government scheme, with a total of £94 billion worth of properties being sold since it was launched in 2013.

It’s no secret that property prices in the UK have continued to steadily rise in the last decade, and with only a year left of Help to Buy, Moveable explains how the scheme works, and who it’s intended for.


What is the Help to Buy scheme?

Help to Buy is a government-backed scheme launched in 2013, aiming to help first-time homebuyers get onto the property ladder. Through an equity loan, Brits can purchase a newly-built home by putting down a 5% deposit and borrowing 20% of the purchase price (40% in London) – with a 5-year interest free plan. After these 5 years, the buyer will have to pay an annual fee of 1.75% on the amount of the outstanding loan – this will increase annually by inflation. First-time buyers can additionally receive a better mortgage rate from the lender due to a larger amount being put down.

There is one catch though – this scheme does not apply to a second home, or a buy-to-let property.


Who is eligible to apply?

Whether you’re applying on your own or with another person, both of you must meet these requirements:

  • You must be at least 18 years old
  • You must be a first-time homebuyer – you’ve never owned a property in the UK or abroad
  • You must be able to fund at least 80% (60% in London) of the purchase through a combination of deposit and mortgage
  • You must be able to prove that you can afford the mortgage repayments and other outgoings on the home
  • You cannot sub-let your Help to Buy home

Use an eligibility calculator to see if you can afford to buy a home using Help to Buy.


What are the key costs?

There are many costs to consider and prepare for when buying your first property under the Help to Buy scheme.

Firstly, there are price limits on houses you can buy with this loan. Limits can vary for different regions in the UK, and you can find the maximum purchase prices below:

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

You will also need to pay a monthly management fee of £1 from when you take out the equity loan until you pay it off.


Paying back your loan

You must repay the full amount of your loan back when you:

  • Reach the end of the equity loan term (normally 25 years)
  • Pay off your repayment mortgage
  • Sell your home

If you decide to sell your home, you will have to pay the equity loan percentage of the market value or agreed sale price if higher.

Applications for the Help to Buy scheme will close on the 31st of March 2023. You can apply here.

If you’re a first-time homebuyer wishing to apply for this scheme before it ends, you can start planning now by getting credit and mortgage ready. On top of having to pay sky-high moving costs, Moveable is a free and easy-to-use service that provides homebuyers with information and support throughout the complicated process that comes with purchasing a property – ensuring that you get the lowest costs possible!


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