This section will explore the different Government schemes available for first time buyers, such as the mortgage guarantee scheme and Shared Ownership, and provide information about the eligibility criteria for these schemes.

Shared ownership mortgages

With the Shared Ownership scheme, you can purchase a portion of a property while paying rent on the remaining portion.

You can purchase more shares in your property through the scheme, provided you have the means to do so. Formerly, each additional share must be at a minimum of 10% of your property’s value, but as of April 2021, you can buy shares in 1% increments.

If you live outside London and your household earns £80,000 or less per year, you may be eligible for Shared Ownership. However, if you reside in London, the maximum household income increases to £90,000.

To buy a property through Shared Ownership, you must either be a first-time buyer, a previous property owner who cannot afford a new one, or already own a share in a home but wish to relocate. You will require a Shared Ownership mortgage to finance your share of the property.

Mortgage guarantee scheme

In the March 2021 Budget, the government announced the mortgage guarantee scheme to aid buyers with a small deposit to buy properties priced up to £600,000. The initiative closely resembles the previous Help to Buy mortgage guarantee scheme that concluded in 2016 and is scheduled to run until December 2022.

The scheme is available for first-time buyers and homeowners wanting to purchase a more expensive property. They only need to make a 5% deposit, and the Government guarantees to lenders if the property is repossessed or sold for less than the remaining mortgage value.

Lenders must offer a new product range with a five-year fixed interest rate. This will be helpful for buyers who want to be sure that their payments will not increase even if interest rates rise in the future.

Please be aware that certain lenders still provide mortgages for up to 95% of the property price, even without a guarantee from the Government. If you’re unsure which mortgage would be best for you, it’s recommended that you seek advice.

Help to Buy equity loan

The Help to Buy equity loan scheme, open to first time buyers with a 5% deposit, is no longer accepting new applications since 31st October 2022. Those who applied before this date have until 31st March 2023 to finalise their purchases.

The scheme suggests that instead of getting a mortgage for 95% of the property value, the Government would lend buyers 20% of the property price. Therefore, the buyers must only arrange a mortgage for the remaining 75%.

If you buy a property in London, you may be able to borrow up to 40% of the property price. This could reduce your mortgage to 55% of the total property value.

Regional Cap

From April 2021 to March 2023, there will be a limit on the price of properties that qualify for the Help to Buy Equity Loan scheme:

North East £186,100

North West £224,400

Yorkshire and The Humber £228,100

East Midlands £261,900

West Midlands £255,600

East of England £407,400

London £600,000

South East £437,600

South West £349,000

Source: HM Treasury

You can obtain an interest-free Government equity loan for the first five years. After that, you will be charged a monthly interest fee of 1.75% of the equity loan. The interest rate will increase annually in April in line with the Consumer Price Index (CPI) measure of inflation plus 2%. Please note that you can use the loan for purchasing your primary residence and not for a Buy to Let property.

The rules mentioned are specifically for properties located in England. However, similar schemes were also implemented in Scotland and Northern Ireland. The Wales scheme is still accepting applications until March 31, 2023.

Help to buy equity loan repayment

Homebuyers who have used a Help to Buy Equity loan are not required to make interest payments for the first five years, and they must repay the loan when they sell the property or reach the end of the mortgage term, whichever comes first.

Paying back your Help to Buy equity loan early

Many buyers under the Help to Buy scheme may wish to pay back their equity loans early for various reasons, including the desire to fully own their property. While it’s possible to make partial or full loan repayments before the end of the five-year interest-free period, there are certain restrictions to keep in mind. Additionally, interest on the loan must be paid.


During the five-year interest-free period, you cannot make monthly payments to decrease the loan amount. Your options are either to pay the entire loan at once or make a partial repayment of at least 10% of the current property value. This process is called “staircasing.”

If your equity loan is the minimum 10% of your property value, you must pay the full 10% immediately. For an equity loan of 20% of the property value, you can choose between paying it back in two instalments of 10% each or one lump sum of 20%.

Independent Property Valuation

To determine the precise repayment amount, you must arrange for an independent surveyor to value your property first. You can locate a surveyor near your location by visiting the RICS website. Please note that you must bear the valuation cost, which will vary based on your property’s size and remain valid for only three months.


If you pay off your equity loan before it’s due, you will repurchase a portion of your property’s equity. To handle this transaction, you will need the assistance of a solicitor for conveyancing. Additionally, there may be an administration fee of approximately £200 that you will need to pay when you repay or partially repay your Help to Buy equity loan.

Frequently Asked Questions

1. What is a first-time buyer government scheme?

2. What is the First Homes scheme?

3. What is Help to Buy?

4. What is Shared Ownership?

5. What is Right to Buy?

6. What is Lifetime ISA?

7. What are Stamp Duty Land Tax (SDLT) rates for first-time buyers?

8. How much deposit do I need as a first-time buyer?

9. How much can I borrow as a first-time buyer?

10. How do I apply for government schemes for first-time buyers?


  1. First Time Buyer Government Scheme –
  2. Government Home Buying Schemes – HomeOwners Alliance.
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