Not sure why the downvote - seems like a fair question to me. Who owns a house and in what proportions can be totally separate from who is named on the mortgage.
There are two ways to do this - one way would be for you loan them the money first under a separate contract, which you should have a solicitor draw up; then they buy the house themselves. The contract would state the terms for repayment of the loan, which could be e.g. no repayment due until the sale of the house at which point the original amount is returned plus interest equivalent to the growth in value of the house between purchase and sale (or whatever). You'd need to be clear about what happened if the house lost value or they ended up in a negative equity situation.
The other option is where you are directly a party to the purchase of the house and are named as part owners on the deeds. Again the solicitor who is handling the house purchase for them would help with the paperwork.
In either case you would need to clear this arrangement with the mortgage company to make sure they were OK with it.
To answer your specific questions in order:
- Yes, they would still be eligible for the Help To Buy ISAs (assuming that is what you are referring to) even though you would not be
- I'm not sure what "penalty" you are referring to. You'd have to pay tax on any income or capital gain you made from the deal.
- No-one can say whether this is a good deal for you without knowing a great deal more about your individual circumstances (and even then, any such advice you would get on here is worth as much as you pay for it.... if in doubt, consult an IFA.)