Help to Buy Scheme: A Guide for Prospective Buyers 2025

The Help to Buy equity loan scheme was one of the most widely used government programmes for first-time buyers in the UK. Since its launch in 2013, it helped hundreds of thousands of people purchase new-build homes with just a 5% deposit. However, the scheme closed to new applicants in October 2022, and all completions had to be finalised by March 2023.

If you are a first-time buyer wondering what Help to Buy means for you in 2025 — or if you already have a Help to Buy equity loan and need to understand your options — this guide covers everything you need to know.

What was the Help to Buy equity loan scheme?

The Help to Buy equity loan was a government-backed scheme designed to make homeownership more accessible for first-time buyers in England. Here is how it worked:

• The buyer provided a 5% deposit
• The government provided an equity loan of up to 20% of the property value (or up to 40% in London)
• The buyer took out a mortgage for the remaining 75% (or 55% in London)
• The equity loan was interest-free for the first five years
• After five years, interest charges began at 1.75% per year, increasing annually by RPI inflation plus 1%
• The equity loan had to be repaid when the property was sold, or at the end of the mortgage term

Example:

For a £250,000 new-build property outside London:

• Buyer’s deposit: £12,500 (5%)
• Government equity loan: £50,000 (20%)
• Mortgage: £187,500 (75%)

This meant the buyer needed a much smaller mortgage and benefited from lower monthly payments and better interest rates (because the LTV was 75% rather than 95%).

The final version of the scheme — Help to Buy: Equity Loan 2021-2023 — was restricted to first-time buyers only and introduced regional property price caps.

Is Help to Buy still available in 2025?

No. The Help to Buy equity loan scheme is fully closed. No new applications are being accepted, and no new completions can take place. If you are a first-time buyer looking to purchase in 2025, you cannot use this scheme.

However, this does not mean you are without options. Several alternative schemes and routes remain available, and in many cases they are just as effective — or more so — than Help to Buy was. We cover the main alternatives later in this guide, and you can read our comprehensive overview in our guide to government schemes for first-time buyers.

Managing an existing Help to Buy equity loan

If you purchased a property through Help to Buy and still have an equity loan in place, there are several important things you need to understand.

Interest charges after year five:

The equity loan is interest-free for the first five years. After that, interest is charged at 1.75% in the sixth year, and then increases each year by RPI inflation plus 1%. Given recent inflation levels, these charges can escalate significantly over time.

For a £50,000 equity loan, the initial interest charge in year six would be approximately £73 per month (£875 per year). By year ten, depending on inflation, this could have risen to over £100 per month. These charges are in addition to your mortgage payments.

Repaying your equity loan:

You can repay your Help to Buy equity loan at any time, but there are important details to understand:

• The amount you repay is based on a percentage of the property’s current market value, not the original loan amount. For example, if you received a 20% equity loan and your property is now worth £300,000, you would need to repay £60,000 (20% of £300,000)
• You must pay for a RICS valuation to determine the current value before repaying
• You can make partial repayments (known as staircasing), but these must be in blocks of at least 10% of the property’s current value
• An administration fee applies to each repayment transaction

Remortgaging with Help to Buy:

When your initial mortgage deal ends, you can remortgage to a new product, but the Help to Buy equity loan affects your options:

• Your mortgage LTV is calculated based on the remaining equity after the government loan, which limits the products available
• Some lenders are more experienced with Help to Buy remortgages than others
• You may want to consider repaying all or part of the equity loan at the same time as remortgaging, potentially by borrowing enough on the new mortgage to cover the repayment

At Option Finance, we regularly help clients remortgage Help to Buy properties and can advise on whether it makes financial sense to repay the equity loan at the same time.

Selling a property with Help to Buy

If you decide to sell a property purchased through Help to Buy, the equity loan must be repaid from the sale proceeds. The process works as follows:

1. You sell the property at the current market value
2. The government receives their percentage share of the sale price (e.g., 20%)
3. You receive the remaining proceeds after the mortgage and equity loan are settled

Example:

• Original purchase price: £250,000
• Government equity loan: £50,000 (20%)
• Current sale price: £300,000
• Government repayment: £60,000 (20% of £300,000)

If the property has increased in value, the government benefits proportionally. Equally, if the property has decreased in value, the government shares in the loss.

It is important to factor in the equity loan repayment when calculating how much you will have available for your next purchase. Use our stamp duty calculator to estimate the costs of your next property, and our mortgage calculator to model what you could afford.

Alternatives to Help to Buy in 2025

Although Help to Buy has closed, there are several effective alternatives for first-time buyers.

Lifetime ISA:

The Lifetime ISA (LISA) provides a 25% government bonus on savings of up to £4,000 per year, giving you up to £1,000 per year in free money towards your deposit. You must be aged 18 to 39 to open one, and the property must cost £450,000 or less. This is one of the most valuable tools for first-time buyers saving for a deposit.

Shared ownership:

Shared ownership lets you buy a share of a property (typically 25% to 75%) and pay rent on the rest. This dramatically reduces the deposit needed and the size of mortgage required. It is particularly useful in expensive areas. Read our full guide to shared ownership mortgages.

First Homes scheme:

This scheme offers new-build homes at a discount of at least 30% compared to market value. The discount is permanent and passed on to future buyers. Availability depends on local council policies.

95% LTV mortgages:

With the government’s Mortgage Guarantee Scheme encouraging lenders to offer 95% LTV products, first-time buyers with just a 5% deposit have a solid range of mortgage options available. This mirrors the deposit level required under Help to Buy but applies to all properties, not just new builds.

Gifted deposits:

Family members can gift you money towards your deposit. Most lenders accept gifted deposits from close family members, subject to documentation requirements. Read our guide to mortgages with a gifted deposit.

Family springboard and guarantor mortgages:

These products allow family members to support your application by using their savings or property as security, without giving money away permanently. Learn more about guarantor mortgages and family springboard mortgages.

Stamp duty relief for first-time buyers

One benefit that remains firmly in place is the stamp duty relief for first-time buyers. If you are purchasing your first home in England or Northern Ireland:

• You pay 0% stamp duty on the first £300,000
• You pay 5% on the portion between £300,000 and £500,000
• If the property costs more than £500,000, the relief does not apply

This represents a significant saving compared to standard stamp duty rates. On a £300,000 purchase, a first-time buyer saves £5,000 compared to a non-first-time buyer.

Use our stamp duty calculator to calculate your exact liability.

Should you repay your Help to Buy loan early?

If you have an existing Help to Buy equity loan, deciding whether to repay it early is one of the most important financial decisions you will make. Here are the factors to consider:

Reasons to repay early:

• Avoid escalating interest charges — the annual interest increases can become expensive over time, particularly when inflation is high
• Increase your equity — repaying the government’s share increases your stake in the property, which is beneficial when you sell or remortgage
• More mortgage options — without the equity loan, you have a wider choice of mortgage products and potentially better rates
• Simplify your finances — managing a mortgage and an equity loan adds complexity

Reasons to wait:

• You may not have the funds — repaying the loan requires either savings or the ability to borrow more on your mortgage to cover the repayment amount
• Property value uncertainty — if property values have risen significantly, the repayment amount may be higher than the original loan
• Other priorities — you may have more pressing financial needs, such as building an emergency fund or paying off higher-interest debts

Use our affordability calculator to assess whether you could borrow enough to repay the equity loan as part of a remortgage, and our repayment calculator to model the impact on your monthly payments.

Common questions about Help to Buy in 2025

Can I still apply for Help to Buy? No. The scheme is fully closed to new applicants and completions.

What happens if I cannot afford my Help to Buy interest payments? Contact the Help to Buy agent for your region as soon as possible. They may be able to offer payment arrangements. You should also speak to a mortgage broker about remortgaging to repay the equity loan.

Can I let out my Help to Buy property? Letting out a Help to Buy property is restricted. You would need permission from both your mortgage lender and the Help to Buy agent. Consent to let is not guaranteed and may come with conditions.

Can I make home improvements to a Help to Buy property? Yes, but significant structural changes may require consent from the Help to Buy agent. Standard improvements and maintenance are generally permitted.

Does Help to Buy affect my ability to buy a second property? You cannot purchase another residential property while you have a Help to Buy equity loan on your current home. You would need to repay the loan first, either by selling or refinancing. If you are looking to move home, we can help you plan the transition.

Get expert advice on your Help to Buy options

Whether you are managing an existing Help to Buy equity loan or looking for alternatives as a first-time buyer, professional advice can make a significant difference. At Option Finance, our advisers have extensive experience helping clients navigate Help to Buy remortgages, equity loan repayments, and all the alternative routes to homeownership available in 2025.

If you have questions about adverse credit and how it might affect your remortgage or next purchase, we can help with that too.

Apply now to speak with one of our experienced mortgage advisers and get clarity on your best next step.