Help to buy guide

What You Need to Know about Help to Buy in London

Thanks to Help to Buy, people aspiring to move to or relocate in London can purchase a new-build home with just a 5% deposit, and the government will loan up to 40% of the total purchase price. The scheme is helping thousands of new homebuyers purchase their first property without risking all their savings – could it be what you need to make your home ownership dreams a reality?

It’s worth noting that while the Help to Buy scheme has many benefits, it’s not the government’s responsibility to ensure the property you purchase is defect-free. Even new-builds are often rife with costly defects, so if you want to know you’re investing wisely, it’s best to obtain a snagging list from a chartered surveyor before making an offer.

What is the Help to Buy Scheme?

The Help to Buy scheme is a government-led initiative aimed at helping property hunters – particularly first-time buyers – purchase a home without the huge financial burden.

Provided you have a 5% deposit and meet the criteria to apply, you’ll apply for a mortgage to cover as little as 55% of the property’s total price and borrow the remaining 40% (20% maximum outside of London) from the government. The government’s loan is interest-free for the first five years.

When you sell your home, the government will receive 40% of the equity. So, if you buy a property for £400,000 and sell it for £500,000, the government will receive £200,000 and you will get £300,000. You will need to pay off your mortgage with your share of the profits.

Help-to-buy-pic-2 Help to buy guide

Who Qualifies for a Help to Buy Loan in London?

Homeowners looking to relocate and first-time buyers can apply for a Help to Buy equity loan for a new-build London property worth up to £600,000. You can’t own any property when applying for a Help to Buy loan, nor can you sublet the property you purchase under the scheme.

Help to Buy is only available in England, and separate loan rules and criteria apply to regions outside of London. There are similar schemes in Scotland, Wales and Northern Ireland administered by the devolved governments.

How to Apply for Help to Buy

The Government-appointed Help to Buy London agent can guide you the process of applying for a Help to Buy equity loan, from handling your application to providing general property advice. Find more information by visiting helptobuylondon.co.uk or calling 0300 5000996.

Considerations When Searching for a Home

While a Help to Buy equity loan can help you purchase a home, it can’t highlight any areas that need improving or urgent defects. You might assume all newly built property are in near-perfect condition, but a recent study suggests that the average new-build hides up to 150 defects.

If you’re interested in the Help to Buy Scheme, you’re also undoubtedly interested in keeping hold of your savings, so you might consider obtaining a snagging list before purchasing a property. For as little as a few hundred pounds, we can give you the report you need to force your developer or builder into completing the repairs at no expense to you.

Learn more about snagging lists for London new-builds or call our RICS Chartered Surveyors on 020 7736 2383 to discuss your requirements.

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