Help to Buy Scheme in London (Equity Loan Alternatives)

The Help to Buy Equity Loan scheme is now closed. The government-backed initiative officially stopped accepting new applications on 31 October 2022 and fully ended on 31 March 2023.

If you are looking to buy a property in London, you can no longer apply for this specific loan. However, several other schemes and buying options are active to help you secure a new home with a low deposit.

What is the Help to Buy Equity Loan?

The original scheme was designed for first-time buyers. It allowed you to buy a new build home with a 5% deposit. The government provided an equity loan for up to 40% of the property's value in London (and up to 20% elsewhere in England), which was interest-free for the first five years. You then secured a standard mortgage for the remaining amount.

What to Do If You Already Have a Help to Buy Loan

If you bought your home using the scheme, your equity loan remains active. Here are the key points to remember about managing your account:

• Interest-free period: Your loan is interest-free for the first five years. In the sixth year, you will start paying a monthly interest fee of 1.75%, which rises annually in line with inflation (CPI plus 2%).
• Repaying the loan: You can pay back the loan at any time. The amount you repay is calculated as a percentage of your home's market value at the time of repayment, not the original amount you borrowed.
• Refinancing or selling: Many homeowners choose to remortgage to pay off the equity loan before the interest fees start in the sixth year. If you decide to sell your home, the equity loan must be repaid in full from the sale proceeds.

The administrative agency Homes England now manages all active accounts. You should contact them directly for help with valuations, remortgaging, or selling.

Active Alternatives to Help to Buy in London

While the equity loan scheme has ended, several active buying options exist for first-time buyers in the capital:

Shared Ownership

This is currently the most popular alternative to Help to Buy. Often referred to as part-buy, part-rent, the Shared Ownership scheme allows you to buy a share of a property (usually between 10% and 75%) and pay a subsidised rent on the rest. Because you only mortgage the share you own, your deposit is much smaller. You can buy more shares over time through a process called staircasing.

First Homes Scheme

The government's First Homes scheme offers new build homes to local first-time buyers and key workers at a discount of 30% to 50% compared to the open market value. The discount stays with the property forever, meaning future buyers will also benefit when you decide to sell.

Own New

The Own New initiative is a developer-backed program that works with mortgage lenders to offer first-time buyers and home movers lower interest rates on new build properties. It allows you to secure a high-loan-to-value mortgage with a 5% deposit, making monthly mortgage payments more affordable.

Deposit Unlock

Similar to Own New, Deposit Unlock is a private scheme run by property developers and major lenders. It lets you buy a brand-new home with just a 5% deposit using a competitive 95% mortgage.

If you want to compare prices and locations across the capital, you can browse all active London new builds or search for modern flats in London using our interactive map. Many buyers also secure their homes early by exploring off-plan properties currently under construction.