Comparison Guide · 2026-07-03
Deposit Unlock Scheme vs Help to Buy Equity Loan UK 2026
Deposit Unlock is a mortgage indemnity-backed scheme letting first-time buyers and home movers buy a new-build home with just a 5% deposit at standard mortgage rates, insured by housebuilders rather than the government. Help to Buy equity loans closed to new applications in England in 2023, but many existing borrowers are still repaying an interest-free-for-5-years government equity loan (typically 20%, or 40% in London) — understanding both matters for anyone comparing new-build routes or with an existing Help to Buy loan.
At a Glance
| Feature | Deposit Unlock | Help to Buy Equity Loan (Legacy) |
|---|---|---|
| Availability | Live scheme — available on participating new-build developments | Closed to new applicants (England) since 2023; still relevant for existing borrowers |
| Deposit required | 5% of the full purchase price | 5% deposit was required, plus a 20% (40% London) government equity loan |
| Who underwrites the risk | Housebuilders fund an indemnity to protect the lender against high-LTV losses | The government directly held an equity stake in the property |
| Interest/fees | Standard mortgage rate on 95% of the property value, no separate loan fees | Interest-free for first 5 years, then rising fees (1.75%+, uprated by RPI+2% from year 6) |
| Repayment | Standard mortgage repayment only | Equity loan repaid as a percentage of the property's current value on sale/remortgage, not the original loan amount |
| Property type | New-build homes on participating developments only | New-build homes only (for the original scheme) |
When Deposit Unlock Wins
- You are buying a new-build home now and want a 5% deposit mortgage at standard, transparent rates
- You want to avoid any separate equity loan repayment calculation based on future property value
When Help to Buy Equity Loan (Legacy) Wins
- This is largely a legacy comparison — existing Help to Buy borrowers benefit from having interest-free years already banked
- If you already hold a Help to Buy loan, understanding its structure helps you plan repayment or a staircasing/full repayment strategy
Frequently Asked Questions
Is Help to Buy still available to new buyers in 2026?
No — the Help to Buy equity loan scheme in England closed to new applications in October 2022 with a final legal completion deadline in March 2023, so no new equity loans have been issued since, though many existing borrowers continue repaying loans taken out before the closure.
How does the Deposit Unlock scheme work?
Deposit Unlock allows first-time buyers and home movers to buy a participating new-build home with just a 5% deposit, with participating housebuilders (rather than the government) funding an insurance-style indemnity that protects the mortgage lender against losses on the high loan-to-value portion, letting the buyer access standard mortgage rates rather than a specialist high-LTV product.
How is a Help to Buy equity loan repaid?
The loan is repaid as a percentage (matching your original loan percentage, e.g. 20% or 40%) of the property's current market value at the time of repayment, sale or remortgage — not a percentage of the original purchase price — meaning if your property has risen in value, you repay more in cash terms than you originally borrowed.
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What happens to Help to Buy loan fees after year 5?
From year 6 onwards, borrowers pay an annual fee starting at 1.75% of the original loan amount, increasing each year by the Retail Prices Index (RPI) plus 2%, which can add up significantly over time and is a key reason many Help to Buy borrowers look to repay or remortgage the equity loan before these fees escalate.
Can I still repay my existing Help to Buy loan even though the scheme is closed?
Yes — existing borrowers can repay their equity loan in part or in full at any time (subject to minimum repayment amounts, typically 10% of the current property value), requiring an independent RICS valuation to establish the current market value on which the repayment percentage is calculated.
Key Sources
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Disclaimer: This comparison is general information, not personal financial advice. Figures reflect the 2026/27 UK tax year and can change. Always check current HMRC/gov.uk guidance or speak to a regulated adviser before making a decision.