Help to Buy Calculator

Understanding Help to Buy Schemes in the UK

Help to Buy schemes were introduced by the UK government to make homeownership more accessible, particularly for first-time buyers who struggle to save large deposits. There are two main types of Help to Buy: the Equity Loan scheme and Shared Ownership. Each works differently and suits different circumstances, so it is important to understand the details before committing.

Help to Buy Equity Loan

Under the Equity Loan scheme, the government lends you up to 20% of the property value (or 40% in London) interest-free for the first five years. You need a minimum deposit of just 5%, and the remaining amount is covered by a standard mortgage. This means you only need a mortgage for 75% of the property price (or 55% in London), which typically gives you access to much better mortgage rates due to the lower loan-to-value ratio.

After the initial five-year interest-free period, you begin paying interest on the equity loan at a rate of 1.75%, which increases annually by the Consumer Price Index (CPI) plus 2%. The equity loan must be repaid when you sell the property, remortgage to repay it, or after 25 years, whichever comes first. Crucially, because the loan is based on a percentage of the property value, the amount you repay will rise or fall in line with your home's market value at the time of repayment.

Shared Ownership

Shared Ownership allows you to buy a share of a property, typically between 25% and 75%, and pay rent on the remaining share to a housing association. You take out a mortgage on the share you own and can increase your ownership over time through a process called staircasing, eventually owning the property outright if you choose.

Shared Ownership is available on both new-build and resale properties and is aimed at households with a combined income of £80,000 or less (£90,000 in London). Since 2021, the reformed Shared Ownership model includes a 10-year repair and maintenance period where the housing association covers essential repairs, reducing the financial risk for buyers.

How to Use This Help to Buy Calculator

Our calculator helps you understand the financial breakdown of purchasing a home through either scheme. Simply enter the full property price, select your scheme, input your deposit amount and expected mortgage interest rate, and the calculator will show you:

• Your estimated monthly mortgage payment
• The government contribution (equity loan amount or housing association share)
• The mortgage amount you will need to borrow
• For Shared Ownership, your combined mortgage plus rent total monthly cost

Equity Loan vs Shared Ownership: Which Is Right for You?

Key Considerations Before Applying

Before committing to a Help to Buy scheme, consider the following:

• Equity loan repayment risk: If property prices rise significantly, you will owe more than the original loan amount when you come to repay. Conversely, if prices fall, you repay less.
• Interest charges after year 5: The equity loan interest starts at 1.75% and rises annually. Factor this into your long-term affordability planning.
• Shared Ownership rent increases: Rent on the unsold share can increase annually, typically by RPI plus 0.5%. Make sure you can afford potential increases.
• Selling restrictions: Both schemes have specific rules about selling. With Shared Ownership, the housing association may have first refusal on your property.
• Mortgage availability: Not all lenders offer Help to Buy mortgages. Use a broker who specialises in government-backed schemes to find the best rates.

Related: Read our first-time buyer guide, check your mortgage affordability, or calculate stamp duty costs for your purchase. You can also use our LTV calculator to understand how Help to Buy affects your loan-to-value ratio.