From today, a new London Help to Buy scheme is available to enable UK buyers to get on the housing ladder in the capital. How does it work? And are you eligible? We explain everything you need to know.
The initiative will allow Londoners to buy a property with only a 5 per cent deposit and a mortgage as low as 55 per cent. It forms the latest in a string of schemes designed to stimulate homeownership in the UK. Indeed, since 2010, the government has helped more than 270,000 into home ownership through either Right to Buy and Help to Buy. Help to Buy alone has now helped over 130,000 people across the UK buy a new or bigger home.
The success of the scheme has prompted the government to extend the Help to Buy: Equity loan scheme until 2021, with a further £8.6 billion aiming to help up to 145,000 more people take steps towards owning a home.
Now, though, people in the capital, where property prices are significantly higher than the rest of the country, can also use the scheme.
“Anyone thinking about home ownership and those who believe it is out of reach should look again at the range of government schemes available to them,” says Housing Minister Brandon Lewis.
Chancellor George Osborne adds: “Today’s new scheme means an even better deal in the capital, where buying a home remains out of reach for too many.”
But how does it work and what do you need to get it? Here is London Help to Buy explained:
How is London Help to Buy different from normal Help to Buy?
London Help to Buy scheme is a variation of the main Help to Buy: Equity Loan scheme, which applies specifically to real estate in London. The normal scheme gives first-time buyers up to 20 per cent of their desired home’s value as a loan. As properties are more expensive in the capital, London Help to Buy doubles this maximum to 40 per cent. Buyers are still required to pay a minimum of 5 per cent as a deposit.
How does Help to Buy London work?
If a home cost £400,000 you would need to provide a £20,000 deposit (5 per cent of the purchase price) and you would be able to borrow £160,000 from the government (40 per cent of the purchase price). You would also have to demonstrate to a lender you can qualify for the remaining 55 per cent as a conventional mortgage.
Do I have to pay interest on the government loan?
You will not be charged interest on the 40 per cent loan for the first five years of owning the home. After five years, if the loan is still outstanding, you will then have to pay interest on it. This will start at 1.75 per cent and will rise annually by inflation plus 1 per cent.
Who is eligible?
London Help to Buy equity loans are available to both first-time buyers and existing homeowners looking to move. The only restrictions are that the home must be newly built and be worth a maximum of £600,000. You will also need to be able to afford the mortgage repayments.
Who is offering London Help to Buy loans?
Currently, there are 10 lenders offering London Help to Buy: Aldermore, Bank of Scotland, Barclays, Halifax, Leeds, Lloyds, Nationwide, Natwest, Royal Bank of Scotland and Teachers Building Societies.
When does London Help to Buy expire?
All Help to Buy equity loan schemes will be available to new applicants until 2021.
How do I find eligible properties for London Help to Buy?
You can search for Help to Buy properties in London on the government’s dedicated website, or by using specialist search engines on either Rightmove or Zoopla. You can also contact developers directly to see which new properties are eligible and available.
How can I find out more?
For more information, visit www.helptobuylondon.co.ukGoogle+