London Help to Buy mortgages – what you need to know.
What is help to buy London?
It’s a government scheme launched on 01 Feb this year to offer buyers in the capital a 40% interest free loan (based on the property’s price) for the purchase of new build property up to £600,000.
The loan, given by the Homes and Communities Agency, can be repaid at the end of the 5 year term or at the end of 25 years, interest is applied after the initial 5 year period.
If the loan is not repaid after 5 years, interest is charged as follows:
- Year 1 - 1.75%.
- Year 2 and each year thereafter 1% -plus the retail price index rate.
This means if you don’t repay the loan and don’t sell after 5 years, the interest on the loan portion could become very costly.
The amount you repay is 40% of the value of the property when the loan is payed off, if there is a market down-turn you will pay less and if your property goes up in value you will pay more.
To be eligible for a Help to Buy mortgage London you will be required to show that:
- you own no other property
- it is for residential use only
- you can afford to cover the mortgage and eventual loan repayments
It cannot be used to fund a mortgage of more than 4.5% of your total household income.
At present there are 10 lenders signed up to the scheme. If you would like to find out more and would like to discuss rates on offer call us at Deal Direct on 0800 048 8828.
For advice and a mortgage speak to an adviser today.
0800 048 8828.
