The first part of the scheme is the Help to Buy: Equity Loan, which is available until 2020. It's open to first-time buyers and people looking to move, and is restricted to new-build properties only.
Under the Equity Loan, the buyer only needs to raise 5% of the property value instead of the usual 20% deposit. The government will lend you up to 20% (via the Homes and Communities Agency), giving you a combined deposit of 25%.
For the first five years, your loan is interest free. After this, you'll be charged 1.75% which will go up at a rate of 1% of that figure, every year afterwards (plus inflation). Borrowers can repay their Equity Loan at any time though. If you don't repay while still living at the property, the government will reclaim their 20% when you come to sell it.
Who is Eligible for an Equity Loan?
Equity loans are available to first time buyers, if the property you want to buy is a new build and costs up to £600,000. However, you won't be able to sublet this home or enter a part exchange deal on your old house.
The scheme is only available in England – although Scotland, Wales and Northern Ireland have similar programmes run by their respective governments. If you are looking to buy a new-build in a Greater London borough, the government has increased the upper limit for the Equity Loan from 20% to 40%.