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Help to Buy equity loan

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How the scheme works

With a Help to Buy equity loan, the government loans you up to 20% of the cost of a new-build home, so you only need a 5% deposit and a standard 75% mortgage to make up the rest.

To apply for an equity loan, you’ll need to contact the Help to Buy agent in the area you want to live – they will then assess whether you qualify.

The equity loan is interest free for the first 5 years, but in the 6th year there will be a charge of 1.75% of the loan’s value. After that, the charge will rise on an annual basis by the retail price index (RPI) plus 1%. The home will be in your name, which means you can sell it at any time. However, you’ll have to pay back the equity loan when you sell your home or at the end of your mortgage period – whichever comes first. This will include a share of any growth in the value of the property (see example below).


For a property worth £200,000 Amount Percentage
Cash Deposit £10,000 5%
Equity Loan £40,000 20%
Your Mortgage £150,000 75%

If the home in the table above sold for £210,000, you’d get £168,000 (80%, from your mortgage and the cash deposit) and pay back £42,000 on the loan (20%). You’d need to pay off your mortgage with your share of the money. Who is eligible for Help to Buy equity loan? Eligibility criteria for the scheme are detailed below:

  • Existing home owners and first time buyers
  • Buyer has a maximum deposit of 5% of the purchase price
  • Borrowing from a participating lender
  • Available in England on new build properties up to £600,000 and from participating house builder (alternative schemes are available in Wales and Scotland)
  • Buying a residential property that will be lived in and not rented out
  • Must be the only property owned by the borrower
  • Can meet the affordability criteria for the mortgage and equity loan

Useful links

More information on these schemes can be found at and

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