Life After Help to Buy
The Help to Buy Equity Loan scheme closed to new applicants in March 2023. It helped over 380,000 buyers get on the property ladder with just a 5% deposit. But with the scheme gone, first-time buyers need to know what alternatives exist. The good news is there are several strong options — some arguably better than Help to Buy ever was.
Lifetime ISA (LISA)
- What it is — Save up to £4,000/year and receive a 25% government bonus (up to £1,000/year). Use it for a first home (up to £450,000) or retirement (age 60+)
- Who can open one — Age 18-39. Must be open for at least 12 months before using for a home purchase
- Maximum bonus — If you save £4,000/year from age 18, by age 30 you could have £48,000 saved + £12,000 in government bonuses = £60,000 toward your deposit
- Where to open — Cash LISA (Moneybox, Nottingham Building Society) for guaranteed returns. Stocks and Shares LISA (AJ Bell, Hargreaves Lansdown) if your home purchase is 5+ years away
- Penalty for non-qualifying withdrawal — 25% penalty if you withdraw for anything other than first home or retirement. This means you lose your bonus plus some of your own money. Only save what you are confident you will use for a home
95% Mortgage Guarantee Scheme
- What it is — The government guarantees a portion of 95% LTV mortgages, encouraging lenders to offer them. You only need a 5% deposit
- Example — Buy a £250,000 home with just £12,500 deposit. The government does not lend you money — it guarantees the lender, making them more willing to offer you a mortgage
- Availability — Most major lenders offer 95% mortgages (NatWest, Barclays, HSBC, Halifax, Nationwide). Rates are higher than 90% LTV mortgages, typically 0.5-1% more
- Tip — Use a 95% mortgage to get on the ladder, then remortgage to 90% LTV when your property increases in value. This gets you a better rate
Shared Ownership
- What it is — Buy a share of a property (25-75%) and pay rent on the rest. Gradually increase your share over time (staircasing) until you own it outright
- Deposit — Only 5-10% of your share. On a £300,000 property with 25% share (£75,000), your deposit is just £3,750-£7,500
- Who qualifies — Household income under £80,000 (£90,000 in London). Must be a first-time buyer, previous homeowner who cannot afford now, or existing shared owner
- Pros — Much smaller deposit and mortgage needed. Get onto the property ladder in expensive areas. Build equity over time
- Cons — You pay rent AND a mortgage. Selling can be more complex. Restrictions on modifications. Service charges and ground rent may apply
Other Options
- Family springboard/guarantor mortgages — Parents deposit 10% of the purchase price into a linked savings account for 3-5 years. You get a 100% mortgage (no deposit). Parents get their money back with interest after the fixed period. Barclays, Lloyds, and others offer versions of this
- Right to Buy — Council tenants can buy their home at a significant discount (up to £87,200 in England, £116,200 in London). Check eligibility with your local authority
- First Homes scheme — New-build homes sold at 30-50% discount to local first-time buyers. Discount is locked to the property permanently. Limited availability — check your local council
- Deposit Unlock — Some housebuilders (Barratt, Taylor Wimpey, Persimmon) offer schemes where they provide insurance enabling lenders to offer 95% LTV mortgages on new builds, which are traditionally harder to get high LTV mortgages on
Best strategy: Open a Lifetime ISA immediately and save £4,000/year while you plan. Combine the LISA bonus with a 95% mortgage or shared ownership for maximum buying power. Use a mortgage broker to find the best deal for your specific situation.