Help To Buy
What is Help to Buy?
If you are looking to buy a property in London then the London Help to Buy scheme could help you to move sooner than you think. All you need is a 5% deposit to secure your home. The Government will lend you up to 40% of the property value, meaning you only have to secure a mortgage of up to 55% from a bank or building society. The Government equity loan is interest-free for the first five years and can be repaid at any time during the loan term or on the sale of your home.
London Help to Buy:
• Requires a minimum deposit of only 5% of the property value of your new home.
• Is available on new build homes up to £600,000.
• Is available for properties located in any one of London’s 32 boroughs, or the city of London itself.
Help to Buy: Equity Loan price caps – April 2021 to March 2023
Maximum property price per Region
Yorkshire and the Humber
East of England
The equity loan, the deposit you have saved, and your repayment mortgage cover the total cost of buying your newly built home. The percentage you borrow is based on the market value of your home when you buy it.
There is no interest on the equity loan for the first 5 years. Payment will start in year 6, on the equity loan amount you borrowed. The equity loan payments are interest only, so you do not reduce the amount you owe.
You can repay all or part of your equity loan at any time, however, the payment must be at least 10% of what your home is worth at the time of repayment.
Example of how much your deposit, mortgage and equity loan many be if you buy a new home in London worth £600,000
Paying back the equity loanWhen deciding if an equity loan is right for you, it’s important to consider the full cost of your borrowing:
For the first five 5 years:
• The equity loan is interest free.
• £1 monthly management fee by Direct Debit.
From year 6:
• £1 monthly management fee.
• Monthly interest fee of 1.75% of the equity loan.
• Interest rate will rise each year in April by the Consumer Price Index (CPI), plus 2%.
• Continue to pay interest until you repay your loan in full.When you take out your equity loan, you agree to repay it in full, plus interest and management fees.
You must repay your equity loan in full:
• End of the equity loan term.
• When you pay off your repayment mortgage.
• When you sell your home.
• If you do not follow the terms set out in the equity loan contract and we ask you to repay the loan in full.
The amount you pay back is worked out as a percentage of the market value at the time you choose to repay.
If the market value of your home rises, so does the amount you owe on your equity loan. And if the value of your home falls, the amount you owe on your equity loan falls too.
Frequently asked questions
How long will the Help to Buy scheme run for?The current scheme will be available until March 2023.
What about outside of London?Outside of London the government loan is up to 20% instead of 40%, meaning that your mortgage will be up to 75% of the property rather than just 55%.
Is Help to Buy a shared ownership scheme?No. With the Help to Buy Equity Loan, you purchase 100% of your home and legally own 100% of your home.
Can I sublet my Help to Buy home?No. Help to Buy is designed to assist you to move on to or up the housing ladder. If you wish to sublet, you will first have to repay the Help to Buy equity loan assistance. In exceptional circumstances (e.g. a serving member of the Armed Forces staff whose tour of duty requires them to serve away from the area in which they live for a fixed period) then sub-letting is allowed.
I'm an existing homeowner. Can I access the scheme?Yes. Help to Buy is available to home movers as well as first time buyers, provided you meet the eligibility criteria.