Navigating the UK Housing Market Without the Help to Buy Scheme

For years, the UK government's Help to Buy Equity Loan scheme was the primary way first-time buyers got onto the property ladder. With only a 5% deposit, the government would lend you 20% of the property value, meaning you only needed a 75% mortgage. However, the scheme has now closed, leaving many first-time buyers wondering how they will ever afford a house.

Alternative 1: The Lifetime ISA (LISA)

As discussed in our previous guide, the LISA is the most direct replacement for government support. If you save £4,000 a year, the government will give you £1,000 for free. If you are buying with a partner, you can both open a LISA, meaning you can get £2,000 of free government money added to your deposit every single year.

Alternative 2: Shared Ownership

Shared Ownership allows you to buy a "share" of a property (usually between 25% and 75%) and pay rent on the rest to a housing association. Because you are only buying a fraction of the property, your required deposit and mortgage are significantly smaller.

The Catch: You are still a tenant. You have to pay rent, service charges, and ground rent on top of your mortgage. Furthermore, selling a shared ownership property can be incredibly complicated and restrictive.

Alternative 3: The 95% Mortgage Guarantee Scheme

To replace the Help to Buy scheme, the government introduced a Mortgage Guarantee Scheme to encourage lenders to offer 95% mortgages. This means you only need to save a 5% deposit. You then take out a mortgage for the remaining 95% of the property value.

The Catch: Because a 95% mortgage is extremely risky for the bank, the interest rates are very high. Your monthly payments will be significantly more expensive than if you had saved a 10% or 15% deposit.

What Should You Do?

If you can wait, the best financial decision is always to save a larger deposit. Jumping into a 95% mortgage will cost you tens of thousands of pounds in extra interest over the years. Use the LISA to accelerate your savings, and try to hit a 10% deposit before buying.

To see how long it will take to hit your 10% target, plug your numbers into our Down Payment Calculator.