What is Help To Buy?
With the Government backed Help to Buy scheme, buyers in London can get assistance buying a home with an equity loan of up to 40% of the property purchase price. The Help to Buy equity loan limit was raised from 20% to 40% of the properties purchase value for homes in all London boroughs to reflect the higher property values seen across London.
The aim of Help to Buy is to help first-time homebuyers into homeownership who are unable to access affordable mortgages due to having insufficient deposits. The scheme is available to first-time homebuyers over the age of 18 years buying a home in England.
How does Help to Buy work?
If you wish to purchase a home, you will need to contribute as little as a 5% deposit on a newly built home and your Help to Buy mortgage will make up the rest after the 40% equity loan. Currently Help to Buy in London offers equity loans to buyers looking to purchase a new build home with a purchase price up to £600,000. Borrowers benefit from not paying any interest on this loan for the first five years.
Example: for a home purchased for £400,000
If the home you purchased was £400,000, you will need a (5%) cash deposit of £20,000. You would get £220,000 (55%) from your mortgage with a commercial lender and the remaining £160,000 (40%) from a Government loan. You would need to pay off your mortgage with your share of the money.
Cost of your home - £400,000
Your 5% deposit - £20,000
Government 40% loan - £160,000
Commercial lender 55% mortgage - £220,000
Recent changes to the Help to Buy scheme
A new version of the Government's Help To Buy scheme came into effect on 1 April 2021 and will run until Mar 2023.
This version of the Help to buy scheme will no longer be available to existing home owners and will be restricted to first time buyers only.
The previous scheme was available to anyone that wanted to buy a new-build home in England and was also available for properties up to £600,000 across the country.
Whereas, the new Help to Buy loan will include regional price caps, helping to ensure that those who need the scheme most will be able to use it.
See how Owain used London Help to Buy
to buy at The Gallery, Camberwell.
Am I Eligible For London Help to Buy?
Help to Buy eligibility extends only to newly built homes which cost £600,000 or less. When you buy your new home with London Help to Buy:
- you must be able to afford any interest payments, as well as the monthly fee
- you must not own any other property at the time you buy your new home
- you must not enter a part exchange deal on your old home
- you must not sublet or rent out the property, it must remain your primary residence after you buy it
For more information and to see if you are eligible for the Help to Buy scheme in London, speak to a member of the Peabody team on 020 7021 4842 or alternatively email enquiries@peabodysales.co.uk.
Find out more on the Help To Buy website
Use expert advisers when buying a home with Help To Buy
An important point to remember if you are looking into Help to Buy homes, is to ensure you hire a mortgage or financial adviser that has expert knowledge in this scheme.
Housing Associations like Peabody, and the mortgage brokers they work with will often have panels of solicitors that they recommend who specialise in affordable housing. Whilst a solicitor may be recommended to you on behalf of a housing association, the solicitor is duty bound to act in the buyers best interest, not the sellers.
The importance of using specialist advisors
Kitchen at The Pomeroy, SE14 available with London Help To Buy
Find homes available with London Help to Buy
At Peabody, we have a number of homes within London that can be purchased with the support of the Help To Buy scheme. Use our property search to find your place to call home with Peabody.