The Governments NewBuy or Help to Buy scheme

What is it?

The NewBuy Guarantee scheme aims to help buyers who have a deposit of at least 5% to buy a new-build home. This is a smaller deposit than is normally required. This Help to Buy scheme comes in two parts:

  • The first part which is a Help to Buy Equity Loan, available now, is open to anyone wishing to buy a new home – not just first time buyers – and means you can buy with a 5% deposit.
  • The second part is a scheme for the whole housing market to assist people to buy with a 5% deposit.

Help to Buy Equity Loan

With a Help to Buy Equity loan, the government loans you up to 20% of the cost of a new-build home, so you only need a 5% deposit and a 75% mortgage to make up the rest.

Who qualifies?

Help to Buy Equity loans are open to both first-time buyers and home movers on new-build homes worth up to £600,000. You cannot sublet your home, and you must not own any other property at the time of purchasing your Help to Buy Equity Loan home. Part Exchange deals are also not approved.

How it Works

Under the scheme, individual home builders partner with one or more mortgage lenders who offer 90-95% loans on their properties. At present there are six lenders offering NewBuy mortgages. There are now many house builders operating the scheme and they have each joined forces with one of these lenders to offer NewBuy.

New home buyers will need to qualify for a mortgage with a mortgage lender in the usual way and be subject to the lender’s normal assessment criteria. It is important to note that this does not change a borrower’s responsibility to repay the mortgage in any way.


Property Purchase Price: £200k

Your mortgage: £150k

Equity Loan: £40k

Cash Deposit: £10k

Equity Loan Fees

You won’t be charged loan fees for the first 5 years of owning your home. In the 6th year, you’ll be charged a fee of 1.75% of the loan’s value. After this, the fee will increase every year. The increase is worked out by using the RPI plus 1%.

The home will be in your name, which means you can sell it at any time. You’ll have to pay back the equity loan when you sell your home or at the end of your mortgage period – whichever comes first.

Please contact us if you would like more information about property related issues.