Help to Buy deposit: How much do you need?

help to buy deposit five pound note

We take a look at Help to Buy deposits and, now that the Help to Buy Equity Loan scheme has ended, what are your other options for raising a deposit. We’ll also answer some of the most frequently asked questions about the Help to Buy scheme for anyone who applied for, or received a Help to Buy loan before it closed.

How can I raise a deposit now that Help to Buy has ended?

The Help to Buy Equity Loan scheme was a useful way of house buyers raising funds to purchase a property if you have low savings. With the scheme now ended, there are several options the government offers to assist you financially.

You could choose to buy a property under the Shared Ownership scheme or you could take out a Lifetime ISA to help you save. The government also created the mortgage guarantee scheme to help lenders bring more 5% deposit mortgages to the market. You can find out about all of the government’s assistance schemes for homebuyers by visiting

Can I use my Help to Buy ISA for a deposit?

If you took out a Help to Buy ISA, you can use the money that you have put into it for the deposit. However, the Government only releases the 25% bonus once you have completed the sale. Here’s how that usually works:

There are two types of deposit needed when buying a house. The home exchange deposit is paid to the person selling you the house once your offer has been accepted and you have exchanged contracts. This is usually 10% of the sale price, although it can be negotiated down.

The second type of deposit is the one you need to pay is the deposit at completion or mortgage deposit. This is what the Help to Buy ISA bonus is used for.

So, if you’ve saved £8,000 and are relying on the £2,000 bonus to get you to your minimum deposit amount of 10% this could be a problem. However, you may be able to negotiate the home exchange deposit down by explaining your situation to the vendor.

What was the eligibility criteria for Help to Buy?

The main eligibility criteria for the Help to Buy Equity Loan scheme were:

  • You must be at 18 years old
  • The property you buy must be newly-built and not cost more than £600,000
  • You must prove that you can afford the min 5% deposit, monthly fee, interest payments, mortgage and other expenses involved
  • You must not own any other property or enter a part exchange deal on your previous property
  • You may not sublet or rent out your property after buying

For more information on eligibility, see the Government’s guidelines.

What happens after 5 years Help to Buy?

Once you’ve had your equity loan for 5 years, you will start paying interest on the loan. In year 6 you will start paying the initial rate of 1.75%. This rate will then increase every year according to the Retail Prices Index (RPI) measure of inflation, plus 1% – until your loan is fully paid off.

When and why is Help to Buy ending?

The current Help to Buy scheme ended in October 2022. This followed an extension from the original closing date of March 2021.

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Is Help to Buy only for new builds?

Yes, Help to Buy is only for new build properties. The scheme is open to first time buyers or home movers who do not own another property.

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Help to Buy deposit: how does it work?

Under the scheme, the UK Government lent up to 20% of the cost of your newly-built property (40% if you are buying a property in London), through an Equity Loan. You needed at least 5% deposit but you could also pay more. For the first five years, the Government don’t charge you interest on the loan.

Help to Buy: what are the negatives?

The main benefit of Help to Buy is the first five years of your Government loan being interest-free. However, in year six this changes. You will have to pay 1.75% in year six, after which the interest rate will increase by 1% each year (not including any RPI increase each year). Therefore, one major negative is that your loan will become more and more expensive after year five.

Someone signing a help to buy document

Is it possible to pay off Help to Buy early?

It’s a good idea to pay off as much of your loan off as possible before the end of five years. This is because the Help to Buy loan is only interest-free before year six. To reduce your ongoing costs and begin repaying the equity you have borrowed you can make gradual repayments in a practice known as ‘staircasing’.

Do I need a solicitor when I want to repay my Help to Buy loan?

Yes, you will need to inform the Help to Buy Agency and then instruct a solicitor to begin the process of paying off your Help to Buy loan. The process will include a valuation of your property. This is because your property’s value may have increased or decreased in value.

Valuations are only valid for six months. After six months you will have to get another valuation to make sure it is up to date. Once you have revalued your property the loan will be the same percentage of the new valuation as what you borrowed before.

2023 update: What are my options after Help to Buy?

The Help to Buy scheme closed to new applicants on 31 October 2022. Meanwhile, the Help to Buy ISA closed for new applications in 2019, and you can only pay into the scheme until November 2029.

Going forward, the UK Government has two main options to help you buy your own home. Shared ownership provides financial support for buying a new home if you can’t afford all the deposit and mortgage payments to pay for a home you need. Alternatively, the Lifetime ISA provides you with an opportunity to save for your first home, with the Government providing a 25% bonus on top of your savings each year, to a maximum of £1,000.

What is HomeViews?

HomeViews provides verified resident reviews of the UK’s housing developments. We’re working with developers, landlords and the Government to recognise high performers and help to improve standards in the built environment.

written by

Jan Moys

A residential property expert with over 15 years’ experience creating content... Read all

A residential property expert with ov... Read all