Help To Buy London is a government scheme created to help first-time buyers and existing owners advance in property ladders.
There are a few requirements for the property you like to buy:
- It must be a new building
- The maximum price must be no greater than £600,000
- You must not own more properties
- Property cannot be sub-let or rented out after you buy it
So how this shame work?
Help To Buy is an equity loan. The government is giving up to 40% of the property value. You have to provide a deposit of 5% and only need a mortgage of 55%.
Your mortgage can not be higher than 4.5 times your yearly salary. If you are buying the property with a partner, your chances are higher.
How do you pay back the Help to Buy Scheme?
You must pay back after 25 years, or when you sell the property – whatever situation comes first.
For the first five years, you won’t pay an interest rate on the 40% loan. You will pay only management fees, which is £1/month.
The interest rate will be 1.75% on the equity of loan from year six, which rises annually Retail Price Index(RPI), plus 1%.