Help to buy in London

  • 21/05/2018
Help to buy in London

Buying a home is no dream anymore with help to buy in London.

With the heightened sales value on London properties and large deposits needed to secure a mortgage, the government is providing a helping hand with some great help to buy schemes; Help to Buy ISA, Shared Ownership, Right to Buy & Equity Loan. Each scheme has been designed to help hard workers jump on the property ladder and the good news is; these schemes are not just for first-time buyers. We particularly love the Help to Buy, Equity Loan scheme because all that’s needed is a 5% deposit towards a brand new property, now that’s just a £15k cash deposit towards a £300k property! Here’s how it works:


Equity Loan

Generally, a commercial mortgage provider will give up to a 75% mortgage. The remaining balance needs to be funded by the homeowner. The beauty with the Equity Loan is that you only need a 5% cash deposit. The remaining 20% to 40% will be loaned to you by the Government when purchasing a Greater London new build property so you don’t need to wait to make up your deposit to become a homeowner. And here is another bit sweet of news! The government charges NO interest for the first 5 years of the loan, giving you some breathing space to find your feet in your new home.


help to buy example


Paying back you’re Help to Buy, Equity Loan

  • The Equity Loan scheme is available for a maximum of 25 years or the loan is paid back whenever the property is sold or redeemed, whichever provides the shorter payback term
  • The initial 5-year Equity Loan period is interest-free however, new homeowners will be subjected to a £12 charge per year as an admin fee
  • An interest fee of 1.75% is payable as of year 6 and will rise every year by the rate of RPI (Retail Price Index) inflation, plus 1%.
  • The programme has been designed so the share you pay back to the government is reflective of your selling price. For example, if you sold your £300k property for £350k and the governments’ Equity Loan to your London property was 25%, you will need to pay back £87,500.
  • You pay back your mortgage loan with your share of the money.


Who Qualifies?

Its good news here for both newbie buyers and existing homeowners who are looking to move as long as the property in question is a new build and values up to £600k. Restrictions and conditions apply to:

  • Subletting the new property
  • Part exchanging an existing home
  • The scheme isn’t available to those with more than 1 property in their name
  • The home must have a mortgage. The first charge on the property will be by the mortgage provider and the second charge will be by the government
  • Available to England homes only


Find your Home

The Help to Buy scheme is available on new build properties that are registered on programme. House builders across London have enrolled on the programme for you to take advantage of. Do contact them directly to view their portfolio of properties or start your search through online property portals such as Rightmove and Zoopla where house builders advertise if the new build property is available on the Help to Buy programme.


Application Process

Reserve the property once you have found your home. There is a reservation fee which shouldn’t exceed £500 and then go online to complete the property information form. It’s called a property information form but it’s actually an online application where you declare your financials. Typical questions include your income, benefits, property cost, deposit and mortgage amount so the scheme can assess your affordability to buying a new home.

A response to your application is made within 4 working days and you would hope that the end will result in notification stating ‘Authority to Proceed’. This is the notification that proves your eligibility to the Help to Buy scheme at which time you can apply for your mortgage.

There may be better options for you to consider and we would suggest that you should seek independent financial advice before making a financial commitment.

For more information refer to Help to Buy London or contact our team to find properties on the scheme within our areas.