On the 1st of February 2016 the government increased the Help to Buy equity loan scheme limit from 20% to 40% for buyers in all London Boroughs.
What is the scheme?
The Help to Buy scheme is an equity loan provided by our government. They lend buyers up to 40% of the cost of a new build home, you will need a minimum 5% deposit and a 55% mortgage to make up the rest.
You will not be charged any interest on the 40% loan for the first 5 years of owning the new home. A management fee of £1 a month will applicable from the date you purchase the property.
From year 6, a fee of 1.75% becomes payable on the equity loan, this will rise annually by RPI (Retail Price Index) inflation plus 1%.
How does it all work?
The following example is based on you looking to purchase a new property costing £400,000. You would need your 5% cash deposit of £20,000, then secure a 55% mortgage from one of our lenders for £220,000. The government equity loan would then be £160,000 (40%).
You would need to use this loan to pay off your share of the mortgage - remember you won’t be charged any loan fees on the first 5 years of owning your home.
Who is eligible?
The London Help to Buy equity loans* are available to all first time buyers as well as current home owners looking to move within all London Boroughs. The home you want to buy must a new build property with a price tag no higher than £600,000.
*Help to Buy Equity Loan
Unlike the mortgage amount borrowed, the Government’s loan is an equity loan so will rise and fall in line with the property’s value changing. The loan is interest free for 5 years. After 5 years the loan will be subject to an annual charge of 1.75% that will rise each year by the Retail Price Index plus 1%. The outstanding loan will need to be repaid upon sale of the property.
Terms & Conditions apply. Mortgage availability depends upon your circumstances.
Your home may be repossessed if you do not keep up repayments on your mortgage.
A fee will be payable for arranging your mortgage. Your Mortgage Consultant will confirm the amount before you choose to proceed.
Countrywide Mortgage Services, Countrywide House, 88-103 Caldecotte Lake Drive, Caldecotte, Milton Keynes, Buckinghamshire, MK7 8JT