Help-to-buy loan scheme is changing - how does it affect you?

The Government’s help-to-buy equity loan scheme to support people onto the property ladder is changing from April 2021 - but what does it mean for you?

Help to Buy is a Government programme which aims to help first-time buyers and those looking to move home to purchase residential property.

However, under the changes, the equity loans are now only available to first-time buyers - and the amount people can borrow is now being capped according to the location of the home they are purchasing.

Restricted to first-time buyers

When the scheme was announced in 2013, equity loans were open to anyone who wanted to own a new-build home, but had not saved a big enough deposit - with the loan helping to bridge the gap.

Applicants could borrow up to 20 per cent of the cost on homes up to £600,000 - meaning they would only need a five per cent cash deposit and 75 per cent mortgage to make up the rest of the purchase price.

However, the £600,000 limit is being slashed everywhere, except London, and the loans are now only available to first-time buyers.

While the terms remain the same - applicants can still borrow a minimum of five per cent and up to a maximum of 20 per cent, or 40 per cent in London of the full purchase price of a new-build home - the price of the property eligible is capped depending on where it is and the scheme is limited to first-time buyers only.

A Government spokesman said: “It is restricted to first-time buyers and includes regional property price caps to ensure the scheme reaches people who need it most.

“The amount you pay for a home depends on where in England you buy it.”

Maximum prices

In Yorkshire, the maximum property price which qualifies for a loan is £228,100 - the average property price in the county, according to the latest UK house price index, is £180,856.