Help to Buy London mortgages.

Help to Buy London has now been launched for buyers with a 5% deposit. The London scheme differs to the scheme offered in the rest of the country, as borrowers are given a 40% interest free equity loan for the first 5 years and not 20%.

For the first 5 years you pay no interest for this loan. Once 5 years is passed you can repay what is owed for the 40% equity stake, this could be more than borrowed if your property has increased in value. If you are not in a position to do this the interest is applied to the loan as follows:

• Year 6 - 1.75% is payable on the loan
• Year 7 and beyond – the rate rises annually by the Retail Price Index plus 1% **

**It could mean that by year 10 borrowers are paying as much as 10% on this portion of their mortgage.

For those looking for a London Help to Buy mortgage several lenders have released their rates, deals include:

Barclays

• A 2 year fix at 1.55%
• A 5 year fix at 2.19%

Leeds BS

• A 2 year fix at 1.79%
• A 5 year fix at 2.45%

While London Help to Buy may help many climb on or move up the property ladder, those who do will need to think carefully about what they will do at the end of the 5 year interest free equity loan period. Once mortgage rates are applied and increased each year, the scheme could prove costly.

However, if you can be sure you can pay back the equity stake that you have borrowed at the end of year five, the scheme becomes more attractive.

If you would like to look at your options, to compare standard deals against Help to Buy, call us at Deal Direct.

We will help you find a competitive mortgage to make your home-ownership more affordable.

Call us today on 0800 048 8828