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How to Get the Best Rates on a Help to Buy Mortgage

What interest rates would you expect to pay on a Help to Buy Mortgage? Find out here.

No impact on credit score

Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: August 19, 2021

Important

📢 *UPDATE 06/04/2021: The Help to Buy scheme has now entered its third phase (2021-23) and a few of the rules around it have been altered. Some of the information in this article may be subject to change but you can read up on the latest update to the equity loan scheme here 🏠

When you apply for a mortgage through the Help to Buy scheme, the lender will look at a variety of things to determine what interest rate to give you, including your income, outgoings and credit history. Online mortgage rates tables and Google searches can’t reflect this, so it’s important to find a more accurate way of comparing the market.

This is where the brokers we work with come in. They can help you assess what rates a lender might offer you based on your own set of circumstance and use the information to find you the best Help to Buy mortgage deal.

How to get the best Help to Buy mortgage rates

First off, speak to a mortgage broker. A lot of customers approach us after searching through online mortgage rate tables – the problem is, everyone’s personal circumstances are different and these tools don’t take that into consideration. This can make it difficult to know if you’ll qualify for a mortgage and the rate you are presented with.

Every lender has different rules about what they will and won’t accept from a customer in terms of bad credit or income, so for an accurate reflection of the rate you would expect to pay on your mortgage, you need to speak to a mortgage advisor who specialises in Help to Buy mortgage rates.

If you have more complex financial circumstances such as bad credit or a fluctuating income, you can make sure you’re getting the best deal by using a mortgage broker who knows both the market and which mortgage lenders are most likely to accept your mortgage application.

Getting the best rates on a Help to Buy remortgage

When you approach the end of your initial mortgage term, speak to a Help to Buy mortgage expert to find out whether there’s a better deal available. Many customers have ended up with better rates thanks to a remortgage.

Help to Buy remortgage isn’t really any different to refinancing a standard mortgage. The only real difference is that your equity loan is carried over to the new product.

Help to buy mortgage rates across the UK

Help to Buy varies across the UK. Depending on where you live and the choice of lenders in your area, you may pay a different interest rate on your Help to Buy mortgage.

Cities and highly populated areas often present a wider range of lenders in comparison to smaller cities and towns. So if you live in a more rural area, you may find fewer Help to Buy mortgage products with favourable rates to choose from.

Additionally, if you have any financial issues that pose a risk to lenders, such as bad credit or you’re applying for a mortgage with low income, this can also restrict the number of lenders that may consider you and could result in you having to pay a higher interest rate on your Help to Buy mortgage.

No matter where you live, the mortgage advisors we work with dedicate their time to finding the best mortgage rates for Help to Buy in England, Scotland and Wales.

All the brokers we work with are whole-of-market with access to mortgage lenders across the entire UK.

Help to Buy equity loan mortgage rates

The amount of equity loan you can borrow from the government also differs based on your location. This section will explain exactly how this could impact your application.

How do I find the best Help to Buy mortgages in England and Wales?

Wales is subject to the same terms and criteria as England when it comes to the Help to Buy scheme. You’ll need at least 5% deposit and can take out an equity loan to cover up to 20% of the property’s value, which means you would need a mortgage for the remaining 75%.

If you’re buying in London, the Help to Buy equity loan can cover up to 40% of the purchase price.

The best way to ensure you end up with favourable rates on a Help to Buy mortgage in England or Wales is to apply through a whole-of-market broker. This will give you access to all of the best deals you qualify for and could save you time, money and potential marks on your credit report.

How do I find the best Help to Buy mortgages in Scotland?

In Scotland, you will need at least 5% deposit and can take out an equity loan to cover up to 15% of the property’s purchase price.

Fewer lenders operate in Scotland, so finding the best rates on a Help to Buy mortgage can be trickier, but the way to go about it is much the same: apply through a whole-of-market broker to make sure you have access to all of the best deals available.

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What interest rate do you pay on a Help to Buy Equity Loan?

A Help to Buy equity loan is charged at a 0% interest rate for the first five years but after this, you’ll be charged 1.75% interest on your outstanding loan amount. This does not apply to Scotland as no interest is charged on the equity loan there.

This will increase each year by RPI (Retail Price Index) which can increase or decrease due to inflation, plus 1%.

Equity loan interest rate example

If the property you were buying was valued at £200,000 and you had a 5% deposit of £10,000, your maximum equity loan would be 20% (£40,000), if you were buying in England or Wales.

The examples below are calculated with an RPI of 5% for example purposes only.

Year Interest Rate Retail Price Index +1% Interest Only Loan Repayment
0 – 5 0% 0%
6 1.75 £700
7 1.86 £744
8 1.97 £788
9 2.08 £832
10 2.21 £884

The above example shows the potential interest only payments for an equity loan. These would be paid alongside your mortgage payments and do not pay off the equity loan itself.

What is the best Help to Buy mortgage for a new build property?

As Help to Buy mortgages are only for new-build properties, all of the above applies to anyone who is asking this question.

The advisors we work with are experts in new-build mortgages and can give you bespoke advice on these properties.

Repaying a Help to Buy mortgage

You can choose to repay your equity loan during the term of your mortgage, alongside your interest only payments and your mortgage, although for some borrowers, this can be expensive and difficult maintain.

An alternative could be to pay your equity loan as a lump sum when you sell your property. If your property increases in value over time, the loan amount you have to pay back will increase in line.

Calculating how much your Help to Buy mortgage repayments could be can be complex so speaking to a mortgage broker who has experience in equity loans can really help.

Will bad credit affect my Help to Buy mortgage quote?

There are some specialist lenders who will accept borrowers with bad credit. However, it’s likely that due to the increased risk in lending to someone with a poor credit history, lenders will charge a higher interest rate on your Help to Buy mortgage.

Some lenders view more severe forms of bad credit such as bankruptcy as more of a risk, as this can suggest a history of mishandling debts and money. This is another factor that can affect the amount of interest you may pay on your Help to Buy mortgage.

Because each lender has varying rules on how they assess bad credit mortgage borrowers, it’s best to speak to one of the mortgage advisors we work with who has experience in arranging Help to Buy mortgages for people with bad credit.

The advisors we work with have access to a range of lenders across the whole UK and will work with you to fully understand your situation and then do the work of finding the best Help to Buy mortgage products to suit both your needs and circumstances.

How an advisor can help you find the top Help to Buy mortgages

We have access to over 100 expert mortgage brokers and each one is carefully vetted to ensure they have the specialist knowledge to provide the most accurate advice.

 Here’s how the mortgage advisors we work with can help you:

  • They will search the whole market and find the top 10 Help to Buy mortgages for you.
  • They can calculate your mortgage and equity loan repayments to give you an accurate reflection of what you can expect to pay.
  • They can calculate your affordability for a Help to Buy mortgage and put you in touch with the lenders with the best rates.
  • They will help you through the Help to Buy mortgage process from application through to successful completion.

Find the best Help to Buy mortgage deals by using an expert broker

If you have questions about Help to Buy mortgage rates or would like an accurate Help to Buy mortgage quote, call 0808 189 2301 or make an enquiry.

We’ll match you with an expert broker who specialises in Help to Buy mortgages. They will be happy to answer all your questions and work with you to get the best Help to Buy mortgage rates for your circumstances.

We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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