Help to Buy is changing: What options are available for first time buyers?

The government’s Help to Buy scheme is changing. If you’re saving for your first home, we’ve summarised the options available to you.

Savings accounts: ISAs

Although Help to Buy ISAs closed to new customers in November 2019*, first time buyers can still save a deposit in a Lifetime ISA; a purpose-designed savings account.

Lifetime ISAs replace Help to Buy ISAs. Account holders can regularly save money (up to a limit of £4,000 each year) towards a first home or for later life. The government will add a 25% bonus to any savings, up to a maximum of £1,000. Find out more about the terms and conditions on the government’s website.

*Please note: existing Help to Buy ISA holders customers can continue saving until November 2029. Find out more.

Equity Loans

A new Help to Buy Equity Loan will replace the existing scheme from April 2021. The new Equity Loan is for first time buyers only and can only be used towards a newly built home.

Under the new scheme, first time buyers can borrow a minimum of 5% and a maximum of 20% (or 40% in London) of the full price of a brand new home. There are caps on the maximum purchase price depending on the region of the UK you are buying in.

Shared Ownership

If you are unable to afford a mortgage on the full value of a home, the government’s shared ownership scheme enables buyers to purchase a 25-75% share of a home.

To take advantage of the scheme, your household income must be below £80,000 per year (£90,000 in London). You must either be a first time buyer; a previous home owner who cannot afford a house now; or an existing shared owner moving house. Find out more.

5% mortgage deposits

At the end of 2020, Prime Minister Boris Johnson pledged to create ‘generation buy’ by introducing 5% mortgages deposits. The government is yet to announce the finer details of the proposed scheme.

Buying your first home is a big step, so we recommend seeking financial advice from an independent financial advisor.

If you’re a first time buyer and you’re looking to purchase your first home, we can help. Our conveyancing team will guide you through the process and explain the legalities of buying a house: call us on 0113 264 4414, email conveyancing@emsleys.co.uk or get in touch via live chat on our website.