London Help To Buy scheme launched

The Autumn Statement also saw the Help To Buy scheme tweaked to help first-time buyers purchasing property in London.

The scheme is the same as the government’s existing help to buy equity loan scheme except “twice as generous” because those buying in the capital can borrow up to 40% of the home’s value, instead of 20% under the current scheme.

London Help To Buy will apply to new homes worth up to £600,000 in any of the London boroughs and the City of London.

Applicants must be eligible for a mortgage to qualify for the scheme and the mortgage must be for at least 25% of the property’s value.

Adrian Anderson, director of mortgage broker Anderson Harris, said: “Help to Buy has been hugely successful across the country but hasn’t had such a big impact in the capital because property prices are that much higher. Offering a 40% interest-free loan to London buyers will make a huge difference, enabling many to get on the housing ladder when they simply couldn’t before.

“Take the example of a one-bed flat in Camberwell on the market at £360,000. A 5% deposit works out at £18,000 but if you don’t buy via Help to Buy, you then need to raise a mortgage for the remainder, which requires earnings of circa £85,000, pricing out many buyers. Under London Help to Buy, a 40% interest-free loan would be available, leaving you with a mortgage of just £198,000 to raise. This could be done with an income of £50,000, which is much more achievable in the capital.”