Here's how first-time buyers can bag a home with a 5 per cent deposit from December

The Government has announced the launch of a new Help to Buy scheme

The Government has launched a new Help to Buy Equity Loan scheme for first-time buyers. If you are looking to buy a new-build home within the next year this new scheme is your golden ticket.

Related: Everything we know about the Boris Johnson 5 per cent deposit promise to first time buyers

First-time buyers will be able to apply to the new Help to Buy scheme from Wednesday 16 December 2020. So, eligible buyers will be able to reserve their homes from December with a planned move-in date of 1st April 2021.

How does the new Help to Buy equity loan scheme work?

Exterior of house with brick walls and white window frames

(Image credit: Future PLC/Colin Poole)

Under the new scheme, the government will lend homebuyers up to 20 per cent of the cost of a newly built home. This will be increased to 40 per cent in London. The equity loan will be interest-free for the first five years.

To be eligible for the loan first-time buyers will need to pay a deposit of five per cent or more on the property. They will also need to arrange a mortgage of 25 per cent or more to make up the remaining cost of the property.

Mirror on wall with white walls and telephone

(Image credit: Future PLC)

The new scheme will have regional price limits that will be set at 1.5 times the average first-time buyer price in each region. The intention is to reduce the amount first-time buyers need to borrow by keeping average first-time buyer prices down in each region.

'Help to Buy has already helped more than 270,000 people into homeownership and 82 per cent are first-time buyers,' says Will German, Director of Help to Buy at Homes England. 'The new Help to Buy builds on this success with first-time buyers in front of mind.'

White walls with wooden flooring and table with chairs

(Image credit: Future PLC)

'We're pleased we can help homebuyers with small deposits to own a home, at a time where there are fewer options open to them,' he adds.

'Housing, like most sectors, has experienced a slowdown during the Covid-crisis. But Help to Buy continues to give homebuilders the confidence to keep on building at a more crucial time than ever.'

Related: Martin Lewis reveals his top tips for getting a mortgage as a first-time buyer

Will you be taking advantage of the new scheme?

Rebecca Knight
Deputy Editor, Digital

Rebecca Knight has been the Deputy Editor on the Ideal Home Website since 2022. She graduated with a Masters degree in magazine journalism from City, University of London in 2018, before starting her journalism career as a staff writer on women's weekly magazines. She fell into the world of homes and interiors after joining the Ideal Home website team in 2019 as a Digital Writer. In 2020 she moved into position of Homes News Editor working across Homes & Gardens, LivingEtc, Real Homes, Gardeningetc and Ideal Home covering everything from the latest viral cleaning hack to the next big interior trend.