Help to Buy Scheme UK: What Happened and What Replaced It in 2025

The Help to Buy equity loan scheme closed to new applications on 31 March 2023. If you are searching for a help to buy calculator in 2025, you are likely looking for the government support that replaced it. The main alternatives now available are the Mortgage Guarantee Scheme (supporting 95% mortgages), the First Homes scheme (30% to 50% discount on new builds), and shared ownership (buying a share of a property and renting the rest).

This guide explains what Help to Buy offered, why it ended, what schemes exist today, and how to work out what you can afford as a first-time buyer. Use our mortgage affordability calculator to model your borrowing capacity under current rules.

What Help to Buy was and why it closed

Help to Buy was a government scheme launched in 2013 to help first-time buyers and existing homeowners purchase new-build properties with a smaller deposit. The equity loan component provided a government loan of up to 20% of the property value (40% in London), interest-free for five years. Buyers needed a 5% deposit and a 75% mortgage to cover the remainder.

On a £300,000 new-build home outside London, a buyer put down £15,000 (5%), borrowed £60,000 from the government (20%), and took a £225,000 mortgage (75%). For the first five years, only the mortgage payments were due. After that, interest became payable on the equity loan, starting at 1.75% and rising annually with inflation plus 1%.

The scheme closed because it was always intended as a temporary measure. The government judged that the housing market had recovered sufficiently and that the scheme had served its purpose of stimulating new-build construction and helping buyers during the post-financial crisis period. Existing Help to Buy equity loans remain in place and must be repaid when the property is sold or the mortgage is redeemed.

What replaced Help to Buy: the current landscape

Three main schemes now support first-time buyers and those struggling to save a large deposit. Each works differently and suits different circumstances. None replicates the Help to Buy equity loan exactly, but together they cover a range of affordability challenges.

For a full walkthrough of the first-time buyer mortgage process, see our first-time buyer mortgage guide. For stamp duty savings available to first-time buyers, read our stamp duty guide for first-time buyers.

Mortgage Guarantee Scheme explained

The Mortgage Guarantee Scheme encourages lenders to offer 95% loan-to-value mortgages by providing a government guarantee on a portion of the loan. This reduces the lender's risk, making them willing to lend to buyers with just a 5% deposit. The scheme is available on properties up to £600,000 and is open to both first-time buyers and existing homeowners.

Unlike Help to Buy, there is no government loan to repay. You take a standard mortgage for 95% of the purchase price and put down 5% as a deposit. The government guarantee sits behind the scenes, invisible to the borrower, and simply makes the product available from participating lenders.

Interest rates on 95% LTV mortgages are higher than at 90% or 85% LTV. A buyer with a 5% deposit on a £250,000 property needs £12,500 in savings and borrows £237,500. Monthly payments depend on the rate secured, but expect to pay more than you would with a 10% or 15% deposit. The trade-off is getting on the property ladder sooner rather than saving for longer.

Who qualifies for the Mortgage Guarantee Scheme

The property must be your main residence, not a second home or buy to let. The purchase price cannot exceed £600,000. You need a 5% deposit from your own funds or a genuine gift. The mortgage must be a repayment mortgage, not interest only. There is no household income cap, unlike some other schemes.

Participating lenders include most major UK banks and building societies. You apply through the lender in the normal way; there is no separate government application. The scheme has been extended several times and remains available, though extensions are announced periodically rather than being permanent.

First Homes scheme: discounted new builds

The First Homes scheme offers newly built properties at a discount of at least 30% below market value. In some areas, discounts of 40% or 50% apply. The discount is locked in permanently: when you sell, the next buyer must also qualify for the scheme and benefits from the same percentage discount off the market value at that time.

To qualify, you must be a first-time buyer and your household income must not exceed £80,000 (£90,000 in London). After purchasing, you must use the property as your only or main residence. Local councils may set additional eligibility criteria, such as a local connection requirement or priority for key workers.

On a new-build flat valued at £280,000 with a 30% First Homes discount, the purchase price is £196,000. With a 5% deposit of £9,800 and a 95% mortgage of £186,200, monthly payments are significantly lower than buying the same property at full market value. The discount makes properties accessible that would otherwise be out of reach.

Shared ownership: buying a share

Shared ownership allows you to buy between 25% and 75% of a property and pay rent on the remaining share to a housing association. Over time, you can buy additional shares through a process called staircasing until you own 100%. It is aimed at buyers who cannot afford the full purchase price of a home in their area.

Household income limits apply, typically £80,000 outside London and £90,000 in London, though some housing associations set lower thresholds. You need a deposit on your share only, not the full property value. On a £300,000 property where you buy a 25% share (£75,000), a 5% deposit is £3,750 rather than £15,000 on the full price.

Monthly costs include your mortgage payment on your share, rent on the housing association's share (typically 2.75% of the share value per year), and service charges. Total monthly costs can be comparable to renting privately, but you are building equity in your share. Staircasing incurs valuation, legal, and mortgage fees each time you buy an additional share.

Shared ownership reforms

Recent reforms have made shared ownership more flexible. The minimum initial share was reduced from 25% to 10% in some schemes. Staircasing can now be done in 1% increments rather than the previous 10% minimum. Landlords must maintain properties to a decent homes standard. These changes aim to make shared ownership a more attractive stepping stone to full ownership.

Lifetime ISA: the savings bonus

The Lifetime ISA (LISA) is not a mortgage scheme but complements the options above. You can save up to £4,000 per year into a LISA and receive a 25% government bonus, up to £1,000 per year. Funds can be used toward a first home costing £450,000 or less, or withdrawn after age 60 for retirement.

Over five years of maximum contributions, you save £20,000 and receive £5,000 in government bonuses, giving £25,000 toward your deposit. The LISA must be open for at least 12 months before you can use it for a property purchase. Withdrawing for any other reason before age 60 incurs a 25% penalty, which recovers the bonus and a portion of your own savings.

You can hold a LISA alongside other schemes. For example, use LISA savings as your 5% deposit on a Mortgage Guarantee Scheme mortgage, or toward your share deposit in a shared ownership purchase. The Help to Buy ISA, a predecessor product, closed to new savers in 2019, but existing holders can continue saving until November 2029.

How to calculate what you can afford

Whether you use the Mortgage Guarantee Scheme, First Homes, shared ownership, or a standard mortgage with a larger deposit, the underlying affordability rules are the same. Lenders assess your income, outgoings, and apply a stress test. Most buyers can borrow between four and four-and-a-half times their gross annual household income.

For shared ownership, calculate affordability on your share price, not the full property value. If you are buying a 25% share of a £300,000 home, your share costs £75,000. At 4.5 times income, you need a household income of roughly £16,700 to borrow £75,000. Your deposit requirement is 5% of £75,000, which is £3,750.

Factor in all monthly costs: mortgage payment, shared ownership rent if applicable, service charges, council tax, insurance, and maintenance. A property that passes the lender's affordability check may still stretch your monthly budget if you have not accounted for all running costs.

Use the mortgage affordability calculator to model different deposit sizes, income levels, and scheme scenarios before you start viewing properties.

Comparing the schemes: which suits you?

The Mortgage Guarantee Scheme suits buyers who have saved a 5% deposit and want a standard mortgage on any property up to £600,000. You own 100% from day one and face no restrictions on selling or letting in future. The downside is higher interest rates at 95% LTV and the risk of negative equity if property values fall.

First Homes suits buyers who qualify for the income cap and can find a participating new-build development in their area. The permanent discount makes ownership significantly cheaper, but your choice of property is limited to scheme-eligible new builds, and the discount restriction applies when you sell.

Shared ownership suits buyers who cannot save a large deposit or whose income does not support a mortgage on the full property price. Entry costs are lower, but you pay rent on the unowned share and face restrictions on subletting and making alterations. Staircasing to full ownership takes time and money.

The LISA suits anyone saving toward a first home who can commit funds for at least 12 months. The 25% bonus is effectively free money, but the £450,000 property price cap limits its usefulness in expensive areas.

Existing Help to Buy equity loans: what happens now

If you purchased through Help to Buy before March 2023, your equity loan remains in place. During the first five years, no interest is charged. From year six, interest becomes payable at 1.75%, rising each April by the Consumer Prices Index plus 1%. You can repay the equity loan at any time, in full or in part (minimum 10% of current market value).

When you sell the property, the government recoups its percentage share of the sale price, not the original loan amount. If your property has increased in value, you repay more than you borrowed. On a 20% equity loan, if the property value rises from £300,000 to £350,000, the repayment is £70,000 rather than the original £60,000.

Remortgaging with an outstanding Help to Buy equity loan requires permission from Homes England. Some lenders specialise in remortgaging Help to Buy properties, including staircasing the equity loan into the mortgage to achieve full ownership.

Worked example: first-time buyer in 2025

A couple earns a combined £55,000 and has saved £14,000 through regular saving and a Lifetime ISA bonus. They are looking at a £260,000 new-build flat available through the First Homes scheme with a 30% discount, giving a purchase price of £182,000.

Their £14,000 deposit represents 7.7% of the purchase price. They need a mortgage of £168,000. At 4.5 times their £55,000 income, the headline borrowing capacity is £247,500, so the mortgage is well within range. Monthly payments on a £168,000 mortgage over 30 years at 4.8% are approximately £880.

As first-time buyers, they pay no stamp duty on a property below £425,000. Their total cash needed at completion is the deposit plus legal fees and survey costs, roughly £16,000 to £17,000. Without the First Homes discount, the same property at £260,000 would require a deposit of at least £13,000 at 5% LTV and stamp duty of £1,500, making the scheme saving substantial.

Getting started as a first-time buyer today

Start by checking your credit file and registering on the electoral roll. Calculate your borrowing capacity using the affordability calculator. Research which schemes are available in your target area: First Homes and shared ownership vary by location and housing association.

Speak to a mortgage broker who can access 95% LTV products under the Mortgage Guarantee Scheme and advise on the best route for your circumstances. Obtain an agreement in principle before viewing properties. Budget for all costs beyond the deposit: stamp duty, legal fees, survey, removal costs, and furnishing.

Help to Buy as an equity loan scheme is gone, but government support for first-time buyers continues through several channels. The right scheme depends on your income, savings, location, and whether you want full ownership from day one or are willing to accept shared ownership as a stepping stone.