Help to Build

If designing your own home is something you’ve always aspired to, or you’re tired of viewing houses that don't tick all your boxes, discover how this scheme could help you.

In this article:

What are the benefits of the Help to Build scheme?

The Help to Build equity Loan Scheme is a new government funded scheme, for people who want to build their own home. You do not have to be a first time buyer, you can use it build your next home as well as a chance to get on the property ladder for the first time.

The scheme provides the opportunity to design and build your own home, with a minimum deposit of just 5%. It also allows you to get a cheaper mortgage by topping up your deposit with a five year interest-free loan.

Financial Backing

The government has shown a dedication to self-building through a substantial £150 million funding initiative, opening new doors for aspiring homeowners who want to create their perfect property.

This investment addresses a crucial gap in the UK housing market, where currently only 7% of homes are self-built, demonstrating the potential for growth in this sector.

Empowering choice and collaboration

Community involvement sits at the heart of this initiative, backed by an additional £2.1 million investment focused on engaging local residents in the planning process. This approach ensures that new developments - be they homes, businesses, or offices, will truly reflect what communities need and want, creating spaces that work for everyone.

Shaping local development

Taking a strategic approach to planning and development, the scheme prioritises community input at every stage. By encouraging active participation in decisions about location, design, and integration of new properties, the initiative ensures developments enhance rather than disrupt local areas. This collaborative process can help create sustainable, well-designed communities that benefit both current and future residents.

This combination of financial support and community engagement demonstrates how the Help to Build scheme could revolutionise the way we approach housing development in the UK.

How does the Help to Build equity loan scheme work?

The Help to Build scheme operates through a combination of a self-build mortgage and an equity loan.

Step 1: Secure a self-build mortgage

In order to secure your equity loan, you must first arrange a self-build mortgage from a broker, or provider registered with the Help to Build scheme. These mortgages can have a Loan to Value (LTV) of 95%, meaning you need a deposit of just 5%.

Step 2: Apply for your Help to Build equity loan

Once you have a mortgage in place to finance your build, you can apply for the equity loan. If approved, you’ll receive a loan offer based on the estimated costs to buy the land and build your home. The offer value will range between 5% and 20% (up to 40% if building in London) of these total estimated costs.

What is the cost for self builds?

Without a Help to Build equity loan, the cost to build your own house can vary. The maximum amount you can spend on your self-build under the scheme is £600,000 which includes a maximum of £400,000 for the build itself.

Step 3: Building your home

With financing in place, you can proceed to build your home. This step includes purchasing the land – if you haven't already – finalising designs, obtaining necessary permissions, and overseeing the construction process.

Step 4: Using your equity loan to reduce mortgage repayments

Once your home is built, Homes England, the government funded scheme, will pay the equity loan amount straight to your self-build mortgage provider. This reduces your overall mortgage balance, and you will transition to a standard repayment mortgage for the remaining amount.

What is the cost for self builds?

Without a Help to Build equity loan, the cost to build your own house can vary. With a Help to Buy equity loan, the maximum amount you can spend on your self-build is £600,000 which includes a maximum of £400,000 for the build itself.

Using your equity loan to help with repayments

Once your home is built, the government funded scheme (Homes England) will pay the amount secured via the Help to Build equity loan straight to your self build mortgage provider. Then the equity loan value will be deducted from the amount originally agreed and you will be moved onto a repayment mortgage.

Does Help to Build make it cheaper to build your own home?

When you build a house using the Help to Build scheme you are eligible for a 95% mortgage and an equity loan of up to 20% of the cost to buy the plot of land and build your home (rising to 40% if building in London). This equity loan equity loan can help to make self-build mortgages more affordable if you only have a small deposit.

This means the scheme can make it cheaper to self-build because, instead of borrowing 95% of your home’s value, you only borrow 75% from a mortgage lender. And, interest rates on a mortgage for 75% of the home’s value are lower than those for a 95% loan to value mortgage, making your overall repayments lower.

Repaying your Help to Build equity loan

Understanding how to repay your equity loan is crucial for long-term financial planning.

During the first five years: With the Help to Build equity loan you have five years where no interest is added, and therefore no payments are required. However, a monthly management fee of £1 is payable from the start of your equity loan.

In year six, interest is charged on your loan at a rate of 1.75%, divided into 12 monthly instalments.

From year seven onwards, this rate increases annually in line with the Consumer Price Index (CPI) plus 2%.

Repayment structure

During the term of your equity loan, your monthly repayments only contribute towards interest. You cannot contribute monthly towards the loan itself, you can either pay off in full or make part payments during the loan’s term, following specified scheme conditions. If you sell your house before the end of the term, you will also need to pay back the equity loan in full.

Repayment amounts

When making either a full or part payment towards the equity loan, the percentage you pay back is worked out from the market value of your house at the time of payment.

For example, if you had a self-build mortgage of £400,000 and an equity loan offer of 20%, the original value of your loan would be £80,000. If your house is valued at £500,000 when you choose to pay back the loan, the value to pay back is 20% of that market value, equalling £100,000.

Types of builds eligible for equity loan

There are different types of builds you can use this equity loan for:

Custom builds

With a custom build, you work alongside a developer to design your home within a custom build development.

Self-builds

This type of build enables you to design and build your home from scratch, often with the help of architects or a project managers.

Shell home

This method allows you to purchase e a basic structural shell and customise the interior to your needs, including layout and installations.  

Before applying for an equity loan (and in many cases your self-build mortgage), you must have outline planning permission for the land you want to build on.

Already own your plot of land?

If you already own your plot of land, the self-build mortgage will not cover its cost.  

However, if you use an equity loan to help with the repayments, the plot of land will be included in the percentage share you repay. This is because the Help to Build equity loan takes into account the overall market value of the property at the time of payment.

Right to Build Register

If you don’t already own the plot of land, you can raise your interest through the Right to Build Register, an online platform connecting local planning authorities with individuals who are interested in building their own homes.

Other affordable home ownership schemes

If you’re looking to get onto the property ladder but a Help to Build isn’t right for you, consider these alternatives:

Shared Ownership– Ideal if you're interested in owning a share of a property and paying rent on the remaining share, making ownership more affordable.

Lifetime ISAs – A savings account that helps first-time buyers save for a deposit, offering a government bonus on your contributions.

First Homes Scheme  – Designed for first-time buyers or key workers purchasing a new home in their local area at a discounted price.

Help to Build options throughout the UK

Help to Build is currently only available if you are self-building a property in England.

For information on building a home in Wales visit the Welsh Government website.

If you are planning to build a home in Scotland visit the Scottish Government website to find out about self-build loans.

Whilst there isn't a government-backed scheme to help people who want to build their own home in Northern Ireland, you can find out about self build mortgages available in Northern Ireland here.