With so many people struggling to buy their first property, the help to buy scheme is a government initiative intended to help people get on the property ladder.

The help to buy scheme allows first-time buyers to put down a smaller deposit of 5%, meaning you don't need to save as much to buy your first home.

There is also a help to buy ISA, where the government will boost your savings towards your first home by 25%. This well-established savings scheme is perfect for people saving up for a deposit for their first home.

We look at how help to buy works, the different programmes involved in help to buy, how you can use it for your benefit and how to open a help to buy account.

What is help to buy?

Help to buy is a government scheme which was designed to help first-time buyers purchase their first home. With rising house prices and tougher lending conditions since the credit crunch, getting on the housing ladder seems almost impossible for many people in the UK. There are different parts of the help to buy scheme - there is the help to buy equity loan, the help to buy mortgage guarantee (though this closed in 2016), help to buy shared ownership and the help to buy ISA. The help to buy scheme was launched in 2013, and it is important to be aware of changes to the scheme, and its end date of 2023.

Help to buy equity loan

Help to buy is split into different parts. The first part is the help to buy equity loan, which is only available on new build properties. You only need to raise 5% of the property's value as a deposit, and the government will add 20% to this, allowing buyers to effectively have a 25% deposit, therefore much more favourable mortgage rate. This is a loan, not a grant, so it must be repaid, but for the first five years it is interest-free, and in the sixth year it is 1.75%, rising at a rate of 1% plus inflation. The loan can be repaid at any time, either in two 10% payments or the whole 20%, and if you don't pay it back before you move, the government is entitled to a 20% share of the amount you receive for the house. The help to buy equity loan will end in 2023, but after 2021, it will only be available for first-time buyers and homes which are under a regional price cap.

Help to buy shared ownership

Another element of the help to buy scheme is the help to buy shared ownership scheme which allows you to buy a share of your home and pay rent on the rest. You can buy between 25% and 75% of the property which allows people who can't afford a deposit on a full home to still own property. You can buy bigger shares of the property when you can afford to, and the shared ownership scheme is available on new build homes or existing homes through housing associations. The help to buy shared ownership scheme is available to households who earn less than £80,000 a year (or £90,000 in London), and there are additional schemes for people with disabilities and people aged 55 or over too.

The help to buy ISA

The help to buy ISA is a scheme that is designed to encourage first-time buyers to save up for their first home, with the government boosting the amount you have saved by 25%. You can claim up to £3,000 towards your first home with the help to buy ISA. You can open a help to buy ISA in most banks and building societies, and you can open the account with up to £1,200. If you are planning on buying a home soon, it is worth trying to put the maximum amount in at the start. You can save up to £200 a month, which will become £250 because of the government bonus. To claim the bonus, you must save £1,600 - which if you are paying the maximum amount will be the deposit plus two months. To receive the maximum £3,000 government bonus, you need to have saved £12,000. You can only use the help to buy ISA towards your first property, and the house must be less than £250,000 or £450,000 in London.

Who can use the help to buy scheme?

There are several variations and restrictions to the help to buy scheme. The help to buy ISA is only available to first-time buyers, so if you already own a property, you can't access the scheme. However, the help to buy ISA is available for individuals rather than households, so if you haven't purchased a home, but your partner has, you can still use your help to buy bonus. You must be a UK resident and over 16 to open a help to buy ISA. There are several income restrictions on the help to buy schemes, and there are also additional schemes like the Older People's Shared Ownership scheme and the Home Ownership for People with Long-Term Disabilities scheme which you may be applicable for.

Is it worth using the help to buy scheme?

There are several different factors involved in the help to buy scheme, and it is important to be aware of any restrictions that might apply. For many people, the help to buy scheme is totally worth it, whether it's the savings bonus or the low equity needed. However, for some people, the help to buy scheme isn't as good as other options, for example, if you are buying in an area with low house prices, you may be able to put down more than 5% and get better interest rates if you don't use help to buy. The help to buy ISA is almost definitely worthwhile if you are planning on buying your first home, as the 25% bonus does not need to be repaid. It is also worth considering the help to buy scheme now before more significant restrictions apply, and the programme ends in 2023.

read our useful guide to getting your dream home. 

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