Is Help to Buy a Loan?

The Help to Buy scheme offers an equity loan where the government lends first-time buyers in England money to buy a newly built home.

What is the downside of Help to Buy?

Con: Your loan will become more and more expensive

You'll benefit from five years interest-free, but after that, the rate of interest applied to your loan increases each year. You'll only pay 1.75% in your sixth year, but then your Help to Buy fees will increase by 2% – plus any RPI increase – each year.

Do you have to pay back Help to Buy loan?

Since the Help to Buy loan is interest-free for the first five years, it's advisable to repay as much as you can before this period ends. You can make part repayments, known as “staircasing”, to reduce your ongoing costs when the interest-free period ends, and to start paying off the equity you've borrowed.