London Help to Buy is a government programme that can help you buy a new home – here’s how it works.
London Help to Buy is part of the Help to Buy: Equity Loan scheme. You borrow up to 40% of the purchase price from the government – you’ll need a minimum deposit of 5% and a mortgage for the rest.
You can buy a new build home registered as a Help to Buy property up to the price of £600,000.
The scheme is eligible to all buyers, not just first timers; you just can’t own another property. You also can’t sublet a Help to Buy property, unless you’re a member of the Armed Forces. If you buy a second home after you’ve purchased with Help to Buy, you’ll need to repay the equity loan.
Finding a home and applying
Contact Currell New Homes for details of the Help to Buy properties we’re selling, or have a look at property portals (e.g Rightmove/Zoopla) to find new homes advertised as Help to Buy. The Help to Buy website also has a list of housebuilders offering the scheme.
To apply for Help to Buy, you need to obtain an Agreement in Principle from a mortgage lender, and find and reserve a property. You then need to complete a Property Information Form and the house builder submits this to your local Help to Buy agent; in London this is Aldwyck Housing Group.
The Help to Buy agent assesses your application and if you are eligible will issue an Authority to Proceed within four working days.
You then need to instruct a solicitor and make a full mortgage application. Once you have a mortgage offer your solicitor will liaise with all parties to progress your purchase to exchange and completion.
Do the maths
To buy a Help to Buy property, you’ll need to have a minimum deposit of 5% of the purchase price, and meet the qualifying financial criteria. For example, the maximum income multiple of a Help to Buy purchase is 4.5 x single or joint household income.
You won’t be charged any interest on the government loan for the first five years of owning your home – just an administration fee of £1 per month. From year six onwards, interest is payable at 1.75%, and this rises each year by the increase in Retail Price Index (RPI), if any, plus 1%.
You can repay the equity loan (in part or in full) at any point after the purchase, and must repay it within 25 years. The minimum voluntary repayment is 10%, and the amount is calculated based on the prevailing market value.
When you sell your Help to Buy home you must repay the Help to Buy equity loan. If your equity loan is for 20% of the purchase price, you will have to repay 20% of the sale price.
To find out more, call a member of our team on 020 7226 6611.