What Will Replace Help to Buy in 2023?
The deadline for Help to Buy: Equity Loan applications came and went on 31st October 2022 and the scheme is now on the verge of closing completely.
Those who met the deadline must complete the purchase of their home by 6pm on 31st March 2023.
After this date, Help to Buy will have ended, but what could replace it?
What alternatives are available, and how do you choose the right one? Read on to find out more!
What will replace the Help to Buy: Equity Loan?
At the time of writing (March 2023), the UK Government is yet to announce a like-for-like replacement for the Help to Buy: Equity Loan and the March 31st deadline marks the end of the scheme.
There are, however, other government schemes you could consider instead.
They include, but are not limited to…
The Mortgage Guarantee Scheme:
This scheme makes it easier for people to buy a home with less than 10% deposit by increasing the number of 95% loan-to-value mortgage deals on the market. It was recently extended to the end of 2023.
This initiative helps people buy a new build home at a significant discount (typically 30-50% of its market value). Homebuyers in certain categories, such as key workers and those on low income, get priority access to this scheme.
This is a middle ground between buying and renting, in which homebuyers can purchase a share of a property with a local authority or housing association, paying rent on the portion of the property they don’t own. It is possible to increase your stake over time, up to 100%, through a process called staircasing.
Right to Buy:
A scheme aimed specifically at people looking to buy a council property they’re currently living in. It enables them to do so at a discount, which can also serve as your mortgage deposit if you choose to use it this way.
Other alternatives to consider
As well as alternative government schemes, there are other ways to get a mortgage with limited deposit, although most of them involve family support.
These options include…
- Guarantor mortgages:
With a guarantor arrangement, the family member (usually a parent) who is supporting you agrees to take responsibility for the mortgage if you’re unable to make your payments, and must place savings in an account with the lender to cover the deposit amount or secure the debt against a property they own.
- Joint borrower, sole proprietor mortgages:
A joint borrower, sole proprietor mortgage enables a family member to take on joint responsibility for the mortgage with the relative they’re supporting, without being named on the deeds or living in the property.
Is there a replacement for the Help to Buy ISA?
Yes. There’s a scheme that is often touted as a successor to the Help to Buy ISA – the lifetime ISA (LISA). Although the LISA launched while the Help to Buy ISA was still available, it has gone on to become a popular alternative to the Help to Buy version.
With a LISA, you can pay in up to £4,000 per year to serve as a mortgage deposit and the government will add a bonus of 25% to these funds at the end of the tax year.
You can read more about LISAs on our sister website, Online Money Advisor, or head over to our page on Help to Buy ISA alternatives to find out what other options are available.
How to choose the right alternative
The thing to remember is that anyone who missed out on a Help to Buy ISA or Equity Loan could still have a range of low-deposit mortgage options – but how do you choose the right one?
Your best bet is to speak to a broker who specialises in arranging low deposit mortgages for people like you, and we offer a free advisor-matching service that can help you find one.
Call 0808 189 2301 or make an enquiry today and we’ll set up a free, no-obligation chat with a mortgage broker who can advise you on the best Help to Buy alternatives.