If you want to own a newly built home in London, you could borrow up to 40% of the purchase price from the Government with the London Help to Buy scheme. You would only need a 5% deposit and your mortgage would make up the other 55%. The scheme is available on new build homes valued up to £600,000 to all UK residents, of any age.
With the larger deposit available to you under the London Help To Buy scheme, you may find you are able to obtain a lower interest on your mortgage. This could give you more flexibility in your repayment and may make it easier to obtain a mortgage agreement. London Help To Buy also means that you won’t have to take out a 95% mortgage. You won’t need to pay interest on the government’s equity loan for the first five years.
London Help To Buy is only suitable if you’re sure that you’ll always be able to afford the mortgage repayments for your property. If you don’t repay your loan within the five years, you will incur a monthly interest charge. If you want to repay it after the initial five year period you will need to repay it in chunks of at least 10%. The amount you repay will also fluctuate with the price of your home, meaning that it isn’t a fixed sum.
London Help To Buy schemes are available for new build properties worth up to £600,000. The government has provided information for you to check whether you’re eligible to benefit from this scheme and the FAQ page is helpful for any queries you may have about this scheme.
Entry level 1 bed apartment - £399,950
Your Deposit - £19,998 (5%)
London Help to Buy Equity Loan - £159,980 (40%)
Your Mortgage - £219,972
You should always seek independent financial advice before proceeding with any purchase. We are not qualified to give financial advice and the information provided above is for guidance only.
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