If you are one of the many individuals struggling to buy in London, help is on hand.
If you are looking to get a foot on the property ladder you’ll already be well aware of the increasing demand for property and the impact this is having on their value. If you are based in London (the world’s 3rd most expensive city according to Knight Frank) this upward pressure on property prices is magnified.
Those who live in our capital city are finding it tougher and tougher to afford their first property but there could be a glimmer of hope on the horizon.
In recognition of the on-going price battle facing first time buyers in London the government has adjusted the Help to Buy criteria for those who wish to buy in the city.
The London Help to Buy Scheme which was launched on 1st feb saw the Equity Loan Scheme increase its upper loan limit from 20% to 40% in all London boroughs. Property purchase price can be up to £600,000 and the scheme is open to first time buyers and homeowners.
• 40% Equity Loan is available for buyers in all London Boroughs only
• Available for First Time Buyers and Homeowners
• The home must be a new build, advertised as Help to Buy by a Help to Buy registered developer.
• The maximum purchase price is £600,000.
• The customer must pay a minimum deposit, 5% of the full purchase price
• The mortgage must be on a repayment basis
• You cannot part exchange your current home to buy a new home under Help to Buy.
• You must not own any other property at the time you buy your new home with a Help to Buy equity loan.
• The equity loan is for a maximum of 25 years or before if the property is sold or the mortgage is redeemed, whichever term is the shorter of the two.
• For this scheme you must have a mortgage, which will be a first charge, as the equity loan can only be a second charge.
The Help to Buy scheme is an equity loan provided by the Government. They lend up to 40% of the cost of the new build home with the buyer providing a minimum 5% deposit and a 55% mortgage to make up the rest.
Luckily for them the buyer will not be charged any interest on the 40% loan for the first five years, 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 more information speak to your local mortgage consultant