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What is Help to Buy?

Under the Help to Buy scheme, the Government gives borrowers a loan of up to 20 per cent of the value of a new-build home or 40 per cent in London.

The buyer can then get a mortgage with just a 5 per cent deposit, and the loans are interest free for five years.

After five years, homebuyers must pay an interest fee of 1.75 per cent of the amount of the Help to Buy loan at the time they bought the property.

This rises each year rises each year after that by the rate of inflation (the Retail Prices Index measurement, or RPI), plus 1 per cent.

For example, if a buyer bought a home for £200,000, they would put up a £10,000 deposit (5%), the Government would give a £40,000 loan (20%), and they would need a £150,000 mortgage from a commercial lender (75%).

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