Help to Buy Scheme 2021: Is It Still Your Key to Homeownership?

I’ve watched countless first-time buyers struggle with the Help to Buy Scheme 2021, and here’s what I’ve learned: it’s not the silver bullet most people think it is. While the government’s equity loan can bridge that deposit gap, the eligibility requirements have tightened considerably, and those interest charges after year five can catch you off guard. Before you commit to this path, there are critical details about costs, regional limits, and alternative options that could completely change your approach.

Key Takeaways

The Help to Buy Scheme 2021 ended in March 2023 with no extensions, making it no longer available for new applications.
Current alternatives include First Homes Scheme offering 30-50% discounts and AI-driven equity loans through companies like Proportunity.
The 2021 scheme was restricted to first-time buyers only with stricter eligibility requirements and regional price caps.
Interest charges started at 1.75% after five years, with repayment amounts based on current market value rather than original loan.
Modern homeownership options include no-deposit mortgages, rent-to-buy schemes, and investor partnerships for greater flexibility.

What Makes You Eligible for Help to Buy 2021

What exactly determines whether you’re eligible for the Help to Buy scheme in 2021? I’ll break down the key requirements you need to meet.

You must be a first-time buyer with no prior property ownership anywhere globally. This means you’ll need to sign a legal declaration confirming your status. If you’re married or in a civil partnership, both of you must qualify as first-time buyers.

The property must be a new-build from a registered developer, priced under £600,000, and within regional price caps. You’ll need a minimum 5% deposit plus a mortgage covering 80% of the purchase price (60% in London). Additionally, it’s important to utilize a Help to Buy calculator to assess your affordability range effectively. Your main mortgage can’t exceed 4.5 times your household income, and you must pass government affordability assessments. The mortgage must be on a repayment basis, meaning interest-only or other non-repayment mortgage types won’t qualify.

Breaking Down the Financial Structure and Costs

Understanding the eligibility requirements sets the foundation, but the real complexity lies in how the Help to Buy scheme structures its costs and repayment terms. I’ll break down what you’re actually committing to financially.

You’ll need a minimum 5% deposit from your own savings—no gifted funds unless verified. The government covers 20% (40% in London), leaving you with a 75% mortgage outside London or 55% inside. Your equity loan remains interest-free for five years, then jumps to 1.75% in year six, increasing annually by RPI plus 1%. It’s important to consider that home extension costs can significantly affect your overall financial planning if you plan to expand your property in the future.

Here’s what catches many buyers off-guard: fees apply to the original loan amount regardless of partial repayments. Factor in reservation fees, administration costs, and valuation expenses when staircasing or selling. Remember that partial repayments require a minimum 10% of your home’s current value, not the original loan amount.

Regional Property Price Limits Across the UK

Nine distinct regional price caps determine the maximum property value you can purchase through Help to Buy, ranging from £186,100 in the North East to £600,000 in London. These caps reflect 1.5 times the average first-time buyer property price in each area, ensuring you’re working within realistic local market conditions.

I’ve found northern regions offer the most accessible entry points—North East (£186,100), North West (£224,400), and Yorkshire (£228,100) all sit below £230,000. The Midlands provides mid-tier options around £255,000-£262,000, while southern regions command premium caps: East of England (£407,400) and South West (£349,000). Remember that the scheme is only available to first-time buyers who have never owned property before.

If you’re targeting high-cost areas, the South East caps at £437,600, with London’s £600,000 maximum addressing the capital’s extreme pricing challenges.

Timeline and Current Status of the Scheme

Although the Help to Buy scheme has undergone significant changes since its 2013 launch, understanding its current timeline is essential for planning your property purchase. The original 2013-2021 scheme officially closed on March 31, 2021, with final completions allowed until May 31, 2021, only for pre-June 2020 reservations affected by COVID-19 delays.

The current 2021-2023 scheme launched April 1, 2021, and runs until March 2023 without extensions. You’ll face stricter eligibility—first-time buyers only—and regional price caps replacing the previous £600,000 national limit. The scheme provides a 20% equity loan from the government, helping buyers secure better mortgage rates with a larger combined deposit. If you’re considering this scheme, you can’t carry over applications from the old program. You’ll need fresh applications under the new rules, and builders must register properties specifically for the current scheme’s requirements.

Major Changes From the Previous Help to Buy Version

Since the Help to Buy scheme relaunched in April 2021, it’s introduced several fundamental changes that greatly influence your eligibility and property options.

Eligibility Restrictions

Exclusively for first-time buyers only
Joint applicants must both qualify as first-time buyers
Married couples or civil partners must apply together
Legal declaration required confirming your first-time buyer status
Affordability assessment includes your income and monthly outgoings

Property Price Caps

Regional price limits now apply to all purchases
Maximum price set at 1.5 times average first-time buyer property prices
Different caps established for each English region
London maintains higher limits than other areas
Stricter targeting guarantees appropriate scheme usage

Scheme Duration

Fixed end date of March 31, 2023
No extensions planned beyond this timeline
Government confirms complete scheme termination
Limited window for applications
Final opportunity for Help to Buy access

These changes considerably narrow your options compared to previous versions.

Drawbacks and Limitations You Should Consider

While the Help to Buy scheme offers valuable financial assistance for first-time buyers, you’ll encounter several significant limitations that could impact your property purchase and long-term financial position.

First, you’re restricted to new-build properties only, which excludes older homes and limits your choices. The regional price caps ranging from £186,100 to £600,000 in London may exclude you from higher-priced areas where you actually want to live. Additionally, understanding the typical timeline for selling a house can help you plan your purchase better.

After five years, you’ll face interest charges starting at 1.75% and increasing annually. When you repay, the amount depends on your property’s current market value—if it’s appreciated, you’ll owe more than the original loan. The scheme has now permanently closed after helping over 350,000 families achieve homeownership since 2013.

Remortgaging becomes challenging since most deals require paying off the equity loan first, potentially trapping you on higher rates.

Alternative Pathways to Homeownership in 2024

alternative homeownership strategies 2024

Where can you turn when Help to Buy doesn’t align with your homebuying goals? I’ll walk you through five proven alternatives that address different financial situations.

Shared Ownership lets you purchase 25-75% of a property while renting the remainder, then gradually increase ownership through “staircasing.” It’s managed by housing associations with lower mortgage requirements. The average customer can increase their budget by £88,000 through this scheme, making it a viable option for those who want to avoid co-ownership disputes.

Deposit Assistance Programs like Deposit Open require just 5% down for new builds, while no-deposit mortgages eliminate savings barriers entirely. These programs can help mitigate the challenges faced by first-time buyers.

Equity Loan Alternatives include Proportunity’s AI-driven 15% loans and Ahauz’s investor partnerships that fund your deposit for equity stakes. These options provide flexibility for buyers looking to enter the market with less upfront capital.

Government Discounted Purchases offer 30-50% below market value through the First Homes Scheme, with income caps ensuring affordability. This initiative is part of broader efforts to make homeownership accessible.

Gradual Ownership Pathways like Wayhome and Rent to Buy provide flexible entry points with scheduled ownership increases. These pathways can help buyers manage their financial commitments while still working towards full ownership.

Conclusion

I’ve walked you through the Help to Buy 2021‘s structure, eligibility requirements, and regional caps. You’ll need to weigh the 5% deposit advantage against interest charges starting year six and property restrictions. Don’t overlook alternatives like shared ownership, guarantor mortgages, or regional first-time buyer schemes that might better suit your circumstances. Calculate the total cost over your mortgage term, factor in your income stability, and compare all available options before committing to any scheme.