Common myths about Help to Buy dispelled

October 22, 2013 at 2:44 PM 25 comments

The launch of the latest phase of the Government’s Help to Buy scheme has generated a huge amount of interest from buyers. But an understanding of exactly how the scheme works remains sketchy, with borrowers wanting to know if they meet the criteria to apply.

Here, Zoopla answers some of the main questions home buyers are asking.

Further detail is also available on Zoopla’s Help to Buy page and please feel free to join us for a live webchat this Friday 10/25/2013 2:00pm – 3:00pm via

Help to Buy

Q: Is the scheme only for first-time buyers?

A: No, the mortgage guarantee scheme applies to first time buyers as well as those who have an existing home and are looking to move. However, the property must be your residential home and cannot be a buy-to-let property.

Q: I hear the mortgage guarantees are not being introduced until January 2014, can I move before then?

A: Yes, you can. The mortgage guarantees are not being introduced until January 2014, but it means lenders are now offering cheaper home loans as it is impossible to default on a mortgage before the end of the year.

Q: Can I only buy a new build property with the scheme?

A: No, the mortgage guarantees apply to both new build and existing properties up to the value of £600,000. The first phase of the Help to Buy scheme – known as equity loan – is for new build homes only.

Question mark in shape of houseQ: Can I buy a property regardless of my salary?

A: Essentially, a Help to Buy home loan with a mortgage guarantee is the same as a ‘normal’ mortgage, so the same terms and conditions apply between you and the lender. In most cases, lenders lend three or four times your annual salary.

Q: Am I restricted on the number of bedrooms?

A: No, there is no restriction on the number of rooms. However, there is a restriction on the value of the property, which is up to £600,000 under the mortgage guarantee scheme.

Q: Does the scheme apply to anyone living in the UK?

A: Yes, the mortgage guarantee is available to all UK citizens. It is in contrast to the equity loan phase of the scheme, which is available in England and is for new build homes costing up to £600,000. Scotland has its own equity loan scheme for properties up to £400,000, while Wales is expected to announce a version soon.

Q: Will different lenders offer separate Help to Buy mortgage rates under the scheme?

A: Yes, different lenders set their own terms and rates – although the Government-backed guarantee means the rates should be lower than they would have otherwise been for those buyers with a smaller deposit.

Q: Are the mortgage guarantees just an extension of the equity loan scheme scheme announced earlier this year?

A: No, the mortgage guarantee is a Government-backed guarantee only. There is no equity loan, as with the first phase of Help to Buy launched earlier this year.

Q: Which phase of the scheme is best for me?

A: One of the key differences between the two schemes is that buyers purchase 100 per cent of a property with the mortgage guarantee, whereas they purchase only 80 per cent under the equity loan scheme (where the Government provides an equity loan to cover the remaining 20 per cent). In addition, the equity loan scheme is only available on new build properties.

Got more questions? Join us for a live webchat this Friday 10/25/2013 2:00pm – 3:00pm via

The Help to Buy schemes are subject to terms and conditions. Please check eligibility criteria with your mortgage advisor or IFA.

Entry filed under: General News, Help to Buy. Tags: , , , , , .

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25 Comments Add your own

  • 1. Russell  |  October 22, 2013 at 2:58 PM

    “anyone living in the UK” is not the same as a UK citizen. Can you please clarify?

    • 2. Myra Butterworth  |  October 22, 2013 at 4:08 PM

      Hi Russell, it is UK citizen or someone with the right to remain indefinitely in the UK.
      But ultimately it is going to be a lender’s decision.

  • 3. Col leeds  |  October 22, 2013 at 4:30 PM

    At which time do you pay back the governments 20%? Is that a seperate loan to your mortgage?

    • 4. Myra Butterworth  |  October 22, 2013 at 4:35 PM

      Hi, yes it is a separate loan that is paid back if you sell the property within the first five years. After this time, you are charged fees on the loan.
      A fee of 1.75% of the loan’s value is applied in the sixth year and will increase every year (the increase is worked out by using the Retail Prices Index plus 1 per cent).

  • 5. Paul Watkins  |  October 23, 2013 at 10:21 AM

    Its rubbish, I have just been rejected for a 95% mortgage for a £160,000 with a perfect credit rating and the same lender has offered me 90% for a mortgage up to £250,000 with an AIP so how does that work, still needs work or confidence in the scheme i would suggest

    • 6. Lamin King  |  October 29, 2013 at 3:08 PM

      In comparison to say the USA or Germany, the UK mortgage market is more sophisticated and offers a superior range of tried-and-tested products where risks of borrowers defaulting have been estimated using long-term data. HTB is new and HTB borrowers as a whole are untested in the long term. Consequently, the existing market may offer you a better deal than that available under the HTB scheme. The aim of HTB is not to be the market-leading option for every single purchaser of a property under 600k.

  • 7. EyeJunk  |  October 23, 2013 at 11:49 AM

    im looking to buy a property of approx £140000. I have more than 10% in savings. Am i still able to apply for the mortgage scheme. I dont want to use all my savings with a deposit, as I have that money ear marked for something else.

    • 8. Lamin King  |  October 29, 2013 at 3:20 PM

      Bear in mind that other purchase costs will need to be paid (legal fees, stamp duty for some) plus the initial costs of setting up home (moving costs, new electrical appliances etc.) You may find that after these costs, your deposit is such that a HTB mortgage is the best deal for you. However, you may find that with a deposit above a certain size, that the market may already offer deals on more favourable terms than under HTB. 140K is a significant amount of money in absolute terms, so continue to invest the time and effort to inform yourself regarding your available options and their advantages and disadvantages.

  • 9. G  |  October 23, 2013 at 12:52 PM

    Is it possible to put %20 deposit and get %15 loan from htb ? Therefore putting %35 deposit in total?

    • 10. Lamin King  |  October 29, 2013 at 2:55 PM

      Yes. However the affordability calculations mean that you would not be able to buy a (significantly) more expensive property through HTB, and you would most likely be paying a higher interest rate than if you took out a standard free-market non Help to Buy mortgage. Right now the HTB deals are at upwards of 5% interest. Currently the lenders do not have HTB products with lower rates for those with higher deposits. So there comes a point when there is no benefit in joining the scheme if you have a deposit beyond a certain size. Many argue that is how it should REMAIN as, after all, HTB is designed to help those with low deposits.

  • 11. Marcie  |  October 24, 2013 at 7:25 AM

    Do you know if the equity loan will be extended to purchase existing properties and not just new builds?

    • 12. Myra Butterworth  |  October 24, 2013 at 9:57 AM

      Hi Marcie, thank you for your question about the Government’s Help to Buy scheme. There is no indication yet that the equity loan scheme will be extended to purchase existing properties. It remains the case that you can only buy new builds through the scheme.

      Help to Buy is an issue we’ll discussing more at length this Friday on our live webchat between 2pm and 3pm, and I hope you will be able to join us as we’re interested in hearing from potential buyers considering the scheme. Please visit

  • 13. SYED  |  October 26, 2013 at 6:40 AM

    Hi All,
    Please can someone explain how Help2Buy differs from Newbuy in terms of Buying ?

    • 14. Myra Butterworth  |  October 28, 2013 at 2:17 PM

      One of the main differences between phase one of Help to Buy, introduced earlier this year, and NewBuy is that the equity loan available from the Government via Help to Buy. It means you can initially buy just 80 per cent of the property.
      One of the main differences between phase two of Help to Buy, known as the mortgage guarantee scheme, and NewBuy is that borrowers can buy a pre-owned property. NewBuy applies to new build homes only.

  • 15. Helen  |  October 26, 2013 at 6:07 PM

    We have had an offer accepted and the sellers say the sale must complete before Christmas. However their financial advisor and even The natwest staff we are trying to get a mortgage from are adimant that we can’t get the mortgage funds through before January. What can we do to prove they are wrong as this is now delaying the sale?

    • 16. Myra Butterworth  |  October 28, 2013 at 2:05 PM

      The Treasury has confirmed that while the mortgage guarantees do not come into force until January, buyers can proceed with their purchases before then. Therefore, you can move into your new home before the end of the year under the Help to Buy scheme. I would suggest going back to NatWest.

  • 17. James  |  October 31, 2013 at 3:59 PM

    Q2 “The mortgage guarantees are not being introduced until January 2014, but it means lenders are now offering cheaper home loans as it is impossible to default on a mortgage before the end of the year.”

    What is that sentence is supposed to mean? It doesn’t make any sense.

  • 18. Michelle  |  October 31, 2013 at 11:14 PM

    When you say that there is at least an increase of 1% each year on top of the 1.75% initial payment, would this mean that in my 10th year (five after the initial 5 period, I would be paying back at least 6.75% and every year this increasing by at least 1% or am I missing something?

    • 19. Myra Butterworth  |  November 1, 2013 at 11:34 AM

      Hi Michelle, the amount you pay back equates to 1 per cent on top of the Retail Prices Index (wherever that happens to be at that particular time).

  • 20. Steve Moss  |  November 1, 2013 at 10:33 PM

    I have read online that you can pay back the government loan at any time. This would suggest to me that you do not have to sell your home to own more of it. Can you clarify this?

  • 21. Katya  |  November 8, 2013 at 8:23 AM

    Who knows how long Help2Buy and NewBuy schemes will stay in effect, any idea when they expire?

    • 22. Myra Butterworth  |  November 8, 2013 at 9:35 AM

      Hi Katya, the mortgage guarantee scheme is intended as a temporary measure. The guarantees are being introduced in January 2014 and
      will run for three years.

  • 23. Katya  |  November 8, 2013 at 8:40 AM

    I have now noticed that two of the 4 types of Help to Buy scheme – H2B equity loans and NewBuy are very similar, almost the same aside from the maximal price limit (600k versus 500k). So how to undertstand which of the two I should go with?

  • 24. Michael  |  January 19, 2014 at 2:47 PM

    Can you take out a 35 year mortage with Help To Buy Equity Loan?

  • 25. claire  |  March 12, 2014 at 6:52 PM

    Hi,we have just been refused a mortgage from Halifax (after an hour long,successful in every other way application at the bank) because the developer isn’t registered with the scheme. Does the builder have to be registered with Help to Buy for Mortgage Guarantee? We thought that only applied for Equity Loan. Advice appreciated.


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