What was the Help to Buy scheme?
Help to Buy was a government initiative designed to help first-time buyers get a foot on the property ladder. The centrepiece of the scheme, the equity loan, allowed buyers to purchase a new-build home with just a 5% deposit, with the government topping that up with an interest-free loan for the first five years.
The scheme is now closed in England (31st October 2022), Scotland, and Northern Ireland. Help to Buy Wales, however, remains open for applications until September 2026.
How did it work?
Buyers could borrow up to 20% of their property's market value from the government, or up to 40% in London, interest-free for the first five years. Combined with a 5% personal deposit, this meant buyers only needed a 75% mortgage (55% in London), making homeownership more accessible and opening up better mortgage rates.
After that five-year grace period, interest kicked in at 1.75% in year six, rising annually in line with the Consumer Price Index. The loan had to be repaid within 25 years, on the sale of the home, or earlier if the homeowner chose to do so.
One important thing to understand is that the loan was never a fixed amount. It was tied to the value of your home, so if your property went up in value, so did what you owed. For example, a 20% loan on a £200,000 home is £40,000, but if that home later sells for £250,000, you're repaying £50,000.
On the surface, it gave buyers a meaningful boost. But the problems came later.
The scheme created real difficulties at the remortgage and sale stage. Because the equity loan was tied specifically to the property it was used to purchase, it couldn't be ported to a new home, making it harder to sell and move on. This is one of the contributing factors to the "second-step problem" many homeowners are now facing. You can read more about that here.
Why did the government close it down?
Despite the scale of the scheme, with over 383,000 properties purchased across its lifetime, Help to Buy attracted growing criticism, and ultimately, the problems outweighed the benefits.
The scheme was found to disproportionately benefit people who were already in a stronger financial position. For many first-time buyers, particularly in higher-cost areas, income is a greater barrier than the size of the deposit, meaning an equity loan did little to help those who needed it most.
Economists and housing experts also argued that Help to Buy contributed to house price inflation. By increasing buyer budgets without increasing the supply of homes, it arguably pushed prices up rather than making housing more affordable. A House of Lords report concluded that house prices had risen by more than the loan was worth to buyers.
An IFS study reinforced this, finding that around three-fifths of people who used the scheme could have purchased their home without it, raising real questions about value for taxpayers.
Taken together, these factors led to the scheme closing to new applicants in October 2022, with the final purchases completing in March 2023.
What is available now to help?
There is no single direct replacement for Help to Buy. The government chose not to introduce a like-for-like alternative, and instead the focus shifted toward a combination of background lender incentives and more targeted affordability schemes.
A permanent Mortgage Guarantee Scheme was launched in July 2025, encouraging lenders to offer 95% LTV mortgages to buyers with a 5% deposit. Unlike Help to Buy, this works behind the scenes. It is not a product that buyers apply for directly, but it does mean more lenders are comfortable offering high loan-to-value deals.
Other options that have become more widely available include Shared Ownership, the First Homes scheme (offering discounts of up to 50% on new-builds for eligible buyers), and the Lifetime ISA, which provides a 25% government bonus on savings of up to £4,000 per year for those aged 18 to 39.
The landscape looks different to what it did a few years ago, but the options are there.
If you'd like to understand which route might work best for your situation, our team at Hello Mortgage is here to help.
Phone: 0800 292 2557
Email: hello@hellomortgage.co.uk
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