Home Buy Help to Buy Help to Buy London Equity Loan
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Home Buy Help to Buy Help to Buy London Equity Loan
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Deposit
Equity Loan
Mortgage
When purchasing using Help to Buy there are two applications to proceed with, the mortgage application and also a separate application for Help to Buy. The Help to Buy application process has its own criteria and affordability checks that often differ from those of the mortgage lenders.
As such, it is vital that you speak to an intermediary who understands the Help to Buy scheme and who has access to the Help to Buy affordability calculator. This will allow you to accurately confirm your budget before looking to view any properties.
This calculation is for illustration purposes only. Please contact our mortgage partner Alexander Hall for Help to Buy mortgage advice.
You can get a low-interest loan towards your deposit, to help you get on the property ladder.
Whether you are a first time buyer or already own your own home, Help to Buy London is a government scheme designed to help you advance up the property ladder in London.
The property you buy must:
Help to Buy is an equity loan from the government up to 40% of the value of a property, provided you have a deposit of 5% you will only need a mortgage of 55% of your new home.
New build properties within the 32 boroughs of London up to the value of 600000 are eligible for the Help to Buy London scheme.
When getting a mortgage you will be able to borrow up to a maximum of 4.5 times your salary.
Outside of London the government loan is up to 20% instead of 40%, meaning that your mortgage will be up to 75% of the property rather than just 55%.
You must pay back the loan after 25 years or when you sell your home - whichever comes first.
You will not be charged any interest on the 40% loan for the first five years of owning your home.
However a management fee of £1 a month will be applicable from the date of purchase.
From year six, a fee of 1.75% is payable on the equity loan, which rises annually by RPI (Retail Price Index) inflation plus 1%.
| For a property worth £400,000 | Amount | Percentage |
|---|---|---|
| Cash deposit | £20,000 | 5% |
| Equity loan | £160,000 | 40% |
| Your mortgage | £220,000 | 55% |
If the home in the table above sold for £420,000, you'd get £252,000 (60%, from your mortgage and the cash deposit) and pay back £168,000 on the loan (40%). You'd need to pay off your mortgage with your share of the money.
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