Help to Buy: what replaced it and your options now

Help to Buy was a government-backed equity loan scheme designed to help first time buyers purchase new-build homes with just a 5% deposit. The government lent you up to 20% of the property price (40% in London), and you secured a mortgage for the remaining 75% (or 55% in London). The loan was interest-free for the first five years.

The scheme ran in two phases. Help to Buy Phase 1 launched in April 2013 with no regional price caps or first time buyer restrictions. Help to Buy Phase 2 (the equity loan element) began in January 2014. The final version, which ran from April 2021 to October 2022, restricted eligibility to first time buyers only and introduced regional property price caps.

After the five-year interest-free period, you were charged interest starting at 1.75% of the equity loan value. This rate increased annually by CPI inflation plus 2%. On a £250,000 property with a 20% equity loan (£50,000), the first year's interest charge after year five would have been £875. Because the loan was a percentage of your property value rather than a fixed amount, the repayment amount changed as property prices moved.

Over the scheme's lifetime, the average property purchased through Help to Buy cost £296,000 in England. The average equity loan was £59,000, with an average buyer deposit of £16,000.

The government ended Help to Buy for several reasons. Critics argued the scheme inflated new-build prices, with research from the National Audit Office suggesting some developers increased prices to absorb the equity loan benefit. Properties purchased through the scheme were priced an average of 10-15% higher than comparable non-scheme homes in several regions.

There were also concerns about the long-term cost to borrowers. After the interest-free period ended, the annual charges increased with inflation, creating a growing cost that some buyers had not fully planned for. By 2023, rising CPI meant the interest rate on Help to Buy loans had climbed to approximately 3.5% of the equity loan value.

The scheme also disproportionately benefited buyers who could have purchased without assistance. Around 37% of Help to Buy purchasers had household incomes above £50,000, and roughly 5% had incomes above £80,000. The government decided that more targeted support mechanisms would better serve those who genuinely needed help getting on the property ladder.

For first time buyers in 2026, the key question is: what support is still available? The answer is that several schemes offer comparable or better value for many buyers, particularly the current first time buyer schemes which target a wider range of property types beyond new-builds only.

Several government-backed and industry schemes have filled the gap left by Help to Buy. Each works differently, and the best option depends on your deposit size, income, location and whether you want a new-build or existing property.

Mortgage Guarantee Scheme: This government initiative encourages lenders to offer 95% LTV mortgages by providing a partial government guarantee on the portion above 80% LTV. Unlike Help to Buy, it works on both new-build and existing properties. Major lenders including Barclays, HSBC, Lloyds, NatWest and Nationwide participate. You need a 5% deposit and must be buying a property worth up to £600,000.

Lifetime ISA: If you are aged 18-39, you can open a Lifetime ISA and save up to £4,000 per year. The government adds a 25% bonus, meaning you receive up to £1,000 in free money each year. The maximum property price is £450,000. You must have held the account for at least 12 months before using it. Over five years of maximum contributions, you would save £20,000 and receive £5,000 in bonuses.

First Homes: This scheme offers new-build homes at a 30-50% discount to first time buyers and key workers in local areas. The discount is passed on when you sell, keeping the properties affordable long-term. Your household income must be below £80,000 (£90,000 in London) and the discounted price must not exceed £250,000 (£420,000 in London).

Shared ownership lets you buy a share of a property (between 25% and 75%) and pay rent on the rest. Your mortgage and deposit are based only on the share you buy, which means a much smaller deposit and lower mortgage amount. You can increase your share over time through a process called staircasing, eventually owning the property outright.

Since April 2021, the minimum initial share dropped from 25% to 10% in some areas, and staircasing increments can be as small as 1%. Your household income must be £80,000 or less (£90,000 in London).

The main advantage of shared ownership over Help to Buy is the significantly lower upfront cost. On a £300,000 property, buying a 25% share (£75,000) with a 5% deposit means you need just £3,750 upfront, plus you would pay rent of roughly £168 per month on the unowned share. With Help to Buy on the same property, you would have needed £15,000 (5% of the full price).

The main disadvantage is the combined cost of mortgage payments plus rent plus service charges, which can sometimes exceed the cost of a standard mortgage on the same property. You should carefully compare the total monthly cost before committing to either route. A mortgage advisor can model both scenarios based on your specific circumstances and the amount you can borrow.

Yes. The 95% mortgage market has recovered significantly since the pandemic. Multiple mainstream lenders now offer 5% deposit mortgages on both new-build and existing properties, without needing any government equity loan.

As of mid-2026, the best 95% LTV fixed rates sit around 5.0-5.5% for two-year fixes and 4.8-5.3% for five-year fixes. These rates are higher than those available at 90% or 85% LTV, where you will find rates approximately 0.3-0.7% lower.

On a £250,000 property with a 5% deposit (£12,500), a £237,500 mortgage at 5.2% over 30 years would cost roughly £1,305 per month. Increasing your deposit to 10% (£25,000) would reduce the mortgage to £225,000 at approximately 4.7%, bringing monthly payments down to around £1,172, a saving of £133 per month or nearly £1,600 per year.

If you are struggling to save a larger deposit, consider family support options such as a guarantor mortgage, where a family member uses their savings or property as additional security. This can help you access lower rates without needing a larger deposit yourself.

If you bought a property through Help to Buy and still have an outstanding equity loan, you have several options. Understanding the costs is important because after the five-year interest-free period, charges increase annually.

In year six, the interest rate on your equity loan starts at 1.75% of the loan value. It then rises each year by the Consumer Price Index (CPI) plus 2%. With CPI running at approximately 2.5% in mid-2026, the annual increase is roughly 4.5%, meaning the interest rate compounds quickly. On a £50,000 equity loan, year-six interest would be £875. By year ten, the charge could be roughly £1,040 per year and climbing.

The critical point to understand is that you repay a percentage of your property's current value, not the amount you originally borrowed. If you took a 20% equity loan on a £250,000 property (£50,000 loan) and the property is now worth £300,000, you would need to repay 20% of £300,000, which is £60,000. Conversely, if the property has fallen in value, you repay less.

If you are considering remortgaging to repay your Help to Buy loan, a mortgage advisor can calculate whether this makes financial sense based on your current equity, property value and the interest rates available to you. In many cases, the monthly cost of a slightly larger standard mortgage is lower than the combined cost of a smaller mortgage plus escalating Help to Buy interest charges.