UK Help To Buy Scheme- Entire Process Explained- 2022

Introduction

Hi, welcome back to our channel and podcast! My name is Gemma, and here at WIS we talk about money, mortgages, and positive money mindset.

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On today’s episode of Let’s Talk Money and Mortgages, we have Ifthikar joining us again. For those who don’t know, he is a trained accountant and mortgage advisor with over 10 years of experience and one of the founding directors at WIS.

Today’s topic: Help to Buy scheme—what you need to know before using it.

Q1: What is the Help to Buy Scheme?

Ifthikar:

The scheme is backed by the government to help people buy properties.

You need a 5% deposit, and the government contributes 20% of the property price (or 40% in London).

Example: For an £80,000 property:

• You put down £5,000
• Government provides £20,000
• Mortgage needed: £55,000

This helps first-time buyers get on the property ladder and makes mortgage affordability easier.

Q2: What is “Authority to Proceed”?

Gemma:

You may hear this term when looking at Help to Buy properties.

Ifthikar:

Authority to proceed is one of the first steps in the Help to Buy process.

Unlike a standard mortgage, you need permission from Help to Buy to proceed with your application.

Help to Buy will check your documents, perform calculations, and confirm if you qualify.

Once confirmed, you receive a document allowing you to move forward with your purchase.

Both the bank and developer require this confirmation.

Q3: What about mortgage calculations and eligibility?

Ifthikar:

There are two calculations to consider:

• Bank mortgage calculation (may give 4.7–5x your income)
• Help to Buy calculation (max 4.5x your income, with deductions for commitments/dependents)

Both must work together for approval.

A good advisor can ensure both calculations align.

Q4: How does the deposit work?

Ifthikar:

Minimum is 5%, but you can contribute more than 5%.

Government contributes 20% (or 40% in London).

Example: You contribute 10%, government 20%, total = 30% deposit.

Larger deposits can unlock better mortgage products and lower interest rates.

Q5: Can all advisors help with Help to Buy?

Ifthikar:

Not all advisors handle Help to Buy because it requires extra work.

Some developers have in-house advisors.

Certain brokers, like us, can assist with both Help to Buy application and mortgage application.

Important because information must match across both applications, especially for contractors or self-employed applicants.

Q6: What are the restrictions and downsides of the scheme?

Ifthikar:

Restricted to new-build properties only.

Not all new builds are included—developers have limited quotas.

Regional purchase limits:

• London: up to £600,000
• Other areas: limits can be £200,000–£300,000 depending on region

Repayment based on market value:

Example: Property purchased for £500,000 with £100,000 Help to Buy loan

If property rises to £600,000, you repay 20% of £600,000 = £120,000

Repayment increments: Cannot repay in small amounts; usually done in 10% stages (staircasing)

Valuation and admin fees apply

Q7: What happens when remortgaging or the scheme ends?

Ifthikar:

Help to Buy loans are second charge loans, making remortgaging to another lender more difficult.

Interest-free period: first 5 years

After 5 years, interest is charged and linked to inflation

Planning to repay or remortgage carefully is important

If property values drop, the Help to Buy repayment amount also decreases

Q8: Why is Help to Buy beneficial?

Ifthikar:

Helps first-time buyers bridge affordability gaps

Allows buyers with smaller deposits to enter the property ladder

Can unlock better mortgage rates than a standard 95% mortgage

Closing

Gemma:

These points may not apply to everyone; always consult an advisor for personal guidance.

Our contact details are below—feel free to reach out for questions.

Reminder: A mortgage is secured against your home or property and may be repossessed if repayments are not maintained.

Thank you for joining us! We’ll be back next week with another episode of Let’s Talk Money and Mortgages.

Have a great day, stay safe, and see you soon!