The Mortgage Guarantee Scheme

The mortgage guarantee scheme came into effect in the March 2021 Budget and aims to help first time buyers and home movers who’ve managed to save a 5% deposit but need some additional help to get on to the property ladder.

Buyers can purchase a property costing up to £600,000 using their 5% deposit. The Government will guarantee the mortgages offered, which means if the property is repossessed or sold for less than the value of the outstanding mortgage, some of the lender’s losses will be covered.

The scheme is scheduled to run from April 2021 until December 2022. The terms of the scheme require lenders to offer a five year fixed rate as part of their product range, to help buyers looking for certainty in their budget.

Help to Buy Scheme

Help to Buy is a government scheme designed to help people with limited deposits buy their first property.

The Equity Loan

Under the equity loan part of the scheme, which is available to first time buyers purchasing a new-build property, you need to put down a 5% deposit. The Government will lend you a further 20% of the property price interest-free, or 40% if you’re buying in London, for the first five years.

After the five-year interest-free period finishes, you’ll be charged interest on your loan from the Government at 1.75%. The interest rate will increase every year in April by the Consumer Price Index measure of inflation, plus another 1%.

The current equity loan scheme will run until March 2023. The new scheme will only be available to first time buyers, who will be able to purchase properties up to the value of new regional price caps, shown below.

New Help to Buy regional property price caps

(Price cap for properties eligible for Help to Buy Equity Loan scheme from April 2021 to March 2023)

Region Cap

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 analysis

This scheme ends in 2023, and there are currently no plans to introduce any further equity loan schemes.


The Help to Buy Individual Savings Account (ISA) was designed to help first time buyers save up a deposit.

Savers could initially pay in up to £1,200, followed by up to £200 a month, and the government will add another 25% to any contributions you make. The maximum bonus you can claim is £3,000.

Help to Buy ISA accounts closed to new savers on 30th November 2019. If you already have an account, you can keep saving into it until 30th November 2029, after which additional contributions will no longer be allowed. The government bonus must be claimed by 1st December 2030.

Who is the Help to Buy Scheme for?

  • Help to Buy is designed for first time buyers who are finding it hard to move up the property ladder.
  • Properties bought under the equity loan part of the scheme must be new build homes, and within the value of the regional price caps.
  • You can’t use the scheme to buy a property to let out.

Advantages of the Help to Buy Scheme

  • It’s for buyers who’ve managed to save a 5% deposit.
  • The equity loan is interest-free for the first five years.

Disadvantages of the Help to Buy Scheme

  • You’re restricted to new build properties only, so if you want to buy an older property, you won’t be eligible.
  • You can only buy a property from house builders registered to take part in the scheme.
  • When you sell, you’ll need to pay back the Government the percentage it contributed.
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The Financial Conduct Authority do not regulate buy to let mortgages.

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