Posted 30 December 2015 by
Rupert BatesHelp to Buy London recently changed in February 2016 in order to consider the generally higher property prices within the Capital. This now consists of a 40% equity loan from the government on a five-year interest-free basis. This means that you only have to provide 5% of the new property value for the deposit, on properties up to £600,000.
With this, you would have to obtain a 55% mortgage. If you still need a helping hand with saving money, you might want to think about a Help to Buy ISA. This savings account is a helpful way of encouraging you to save money for your new home.
Since the rise to 40%, there have been 7,978 completions in London and more than three-quarters of these, were made using the new equity loan of 40%.
After the five years of the interest-free equity loan, you will be required to pay an interest fee of 1.75% of the amount you borrowed from the Help to Buy loan. The government equity loan lasts for a maximum of 25 years, or earlier if the property is sold before then. When selling the property, the government must receive 20% of the property value, at the point of sale.
A vast majority of new housebuilders provide the Help to Buy London scheme on their new developments. There are also many high-street banks that offer this method, alongside a mortgage. This scheme was created to make new builds more affordable to both first-time buyers and current homeowners. This scheme is available to all UK residents that live within the 32 London Boroughs or City of London.
Many buyers who manage to purchase a property through Help to Buy often find their monthly mortgage payments are far less than they were previously paying for rented accommodation.In order to find out more about Help to Buy London you can read our guide or contact Aldwyck Housing Group who are the Help to Buy London agent appointed by the government.
Working example
| Property price | £400,000 (100%) |
| Initial deposit | £20,000 (5%) |
| Equity loan | £160,000 (40%) |
| Remaining mortgage | £220,000 (55%) |
Share to Buy
London also has its own version of Shared Ownership called Share to Buy. To qualify, you must have a household income of £90,000 or less, be unable to afford a suitable home through the open market and not currently own a home.
Useful links
Search Help to Buy
What is a Help to Buy ISA?
The buying process Q&A
Two-year or five-year fixed-rate mortgage?
10 mortgage questions to ask
Repaying your Help to Buy equity loan
How to use your equity to help your kids buy a new home
What you should teach your kids about mortgages and borrowing