Affordable home ownership schemes
1. Overview
You may be able to get financial help through a government home ownership scheme if you live in England and can’t afford to buy a home.
Wales, Scotland and Northern Ireland have different home ownership schemes.
The 4 types of home ownership schemes are:
- Help to Buy: equity loans
- Help to Buy: mortgage guarantees (available across the UK)
- shared ownership
- NewBuy
Contact the Help to Buy agent in the area where you want to live to find out more about Help to Buy equity loans and shared ownership schemes.
There are also schemes for council and housing association tenants. Read the guides on Right to Buy and Right to Acquire.
2. Help to Buy: equity loans
Equity loans are open to both first-time buyers and home movers on new-build homes in England with a purchase price up to £600,000.
You won’t be able to sub-let your home if you use this scheme. It must also be your only property.
How it works
With an equity loan:
- you’ll need to contribute at least 5% of the property price as a deposit
- the government will give you a loan for up to 20% of the price
- you’ll need a mortgage of up to 75% to cover the rest
Example
| For a property worth £200,000 | Amount | Percentage |
|---|---|---|
| Cash deposit | £10,000 | 5% |
| Equity loan | £40,000 | 20% |
| Your mortgage | £150,000 | 75% |
Equity loan fees
You won't be charged loan fees for the first 5 years of owning your home.
In the sixth year, you'll be charged a fee of 1.75% of the loan's value. After this, the fee will increase every year. The increase is worked out by using the Retail Prices Index plus 1%.
Your Help to Buy agent will contact you before the fees start, to set up monthly payments with your bank. You’ll also be sent a statement about your loan each year.
Fees don’t count towards paying back the equity loan.
Applying for an equity loan
Contact the Help to Buy agent in the area where you want to live if you’d like to buy a home with an equity loan.
You must buy your home from a registered Help to Buy builder. Your Help to Buy agent should have a list of registered builders for you to choose from.
Selling your home and paying back the loan
You must pay back the loan after 25 years or when you sell your home - whichever is earliest. How much you pay back will depend on the market value at that time.
Example
| Market value of your home | Equity loan taken out | Amount |
|---|---|---|
| Bought for £200,000 | 20% | Borrowed £40,000 |
| Sold for £250,000 | 20% | Pay back £50,000 |
You can pay back part or all of your loan at any time. The minimum percentage you can pay back is 10% of the market value of your home. The amount you pay will depend on the market value at that time.
Example
| Market value of your home | Percentage | Amount |
|---|---|---|
| Bought for £200,000 | Borrowed 20% | Borrowed £40,000 |
| Value at time of payment £220,000 | Paying back 10% | Pay back £22,000 |
3. Help to Buy: mortgage guarantees
Mortgage guarantees helps you buy a home with a deposit of 5% of the purchase price. It’s open to both first-time buyers and home movers for new-build and older homes in the UK with a purchase price up to £600,000.
The guarantee is provided to your mortgage lender by the government - not to you.
Eligibility
To qualify for a mortgage guarantee, the home you want to buy must:
- have a purchase price of £600,000 or less
- not be a shared ownership or shared equity purchase
- not be a second home
- not be rented out after you buy it
The property doesn’t have to be newly built.
You don't have to be a first-time buyer and there's no limit on your level of income. But you can’t use Help to Buy with any other publicly funded mortgage scheme, or an interest-only mortgage.
How to apply
You can apply directly to any lender taking part in the scheme:
- Aldermore Bank
- Bank of Scotland
- Barclays
- Halifax
- HSBC
- Lloyds Bank
- NatWest
- RBS
- Santander
- Virgin Money
The lender will check you’re able to make the repayments before they offer you a mortgage.
4. Shared ownership schemes
Shared ownership schemes are provided through housing associations. You buy a share of your home (between 25% and 75% of the home's value) and pay rent on the remaining share.
You'll need to take out a mortgage to pay for your share of the home's purchase price.
Shared ownership properties are always leasehold.
Eligibility
You can buy a home through shared ownership if:
- your household earns £60,000 a year or less
- you're a first-time buyer - or you used to own a home, but can't afford to buy one now
- you rent a council or housing association property
Older people
You can get help from another home ownership scheme called 'Older People's Shared Ownership' if you're aged 55 or over.
It works in the same way as the general shared ownership scheme, but you can only buy up to 75% of your home. Once you own 75% you won't have to pay rent on the remaining share.
Your local Help to Buy agent can help you with this scheme.
People with disabilities
Home Ownership for People with Long-Term Disabilities (HOLD) can help you buy any home that's for sale on a shared ownership basis if you have a long-term disability.
You can only apply for HOLD if the properties available in the other Help to Buy schemes don't meet your needs, eg you need a ground-floor property. Your local Help to Buy agent can help you with this scheme.
Buying more shares
You can buy more shares in your home any time after you become the owner. This is known as staircasing.
The cost of your new share will depend on how much your home is worth when you want to buy the share. If property prices in your area have gone up, you'll pay more than for your first share. If your home has dropped in value, your new share will be cheaper.
The housing association will get the property valued and let you know the cost of your new share. You'll have to pay the valuer's fee.
Selling your home
If you own 100% of your home, you can sell it yourself. When you put it up for sale, the housing association has the right to buy the property back first. This is known as 'first refusal' and the housing association has this right for 21 years after you fully own the home.
If you own a share of your home, the housing association has the right to find a buyer for it.
Applying for a shared ownership scheme
To buy a home through a shared ownership scheme contact the Help to Buy agent in the area where you want to live.
5. NewBuy
NewBuy lets you buy a newly built home with a deposit of only 5% of the purchase price.
Eligibility
To be eligible for NewBuy, your new home must be:
- a new build  being sold for the first time or for the first time in its current form (eg a new flat that used to be part of a house)
- priced at £500,000 or less
- your main home - you can't use NewBuy to buy a second home or a buy-to-let property
- fully owned by you - you can't use NewBuy for shared ownership or shared equity purchases
- built by a builder taking part in the scheme
To be eligible you must be either:
- a UK citizen
- someone with the right to remain indefinitely in the UK
You don't have to be a first-time buyer and there's no limit on your level of income. But you can’t use NewBuy with any other publicly funded mortgage scheme.
How to apply
You apply for a mortgage from an approved lender. The lender will check that you can afford to repay it, as they would for any other type of mortgage.
You could get a mortgage of up to 95% of the purchase price if the lender is satisfied and you meet all the criteria.
Find out if there are any NewBuy homes in the area where you want to live.