New Help to Buy Equity loan for London announced
- Credit: PA Wire/PA Images
The government will double the equity loan it gives new buyers of new build properties within Greater London to 40 per cent.
In the Autumn Spending Review, George Osborne said that to reflect the current property market in the capital, from early 2016 the government will increase the upper limit in gives new buyers.
To benefit from the Help to Buy equity loan at the moment buyers must have a five per cent deposit. The government will then lend up to 20 per cent of the remaining value of the property. Buyers must then secure a mortgage of up to 75 per cent of the value.
With the new London Help to Buy equity loan buyers will still need to contribute at least a five per cent deposit.
– the government will give a loan for up to 40 per cent of the price
– buyers will need a mortgage of up to 55 per cent to cover the rest
The loan will be available on new build homes in London with a purchase price up to £600,000.
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These changes will be funded by an increase of three per cent on the Stamp Duty paid on buy to let and second home purchases.
Housing Association tenants will be able to buy their homes through the new Right to Buy scheme. A pilot of the scheme involving five Housing Associations will be tested in the next few months, before it is rolled out across the board.
How the numbers work
For a property costing £500,000 (just below the average London property price of £531,000)
5 per cent deposit: £25,000 (£15,000 of which could come from the Help to Buy ISA)
40 per cent government loan: £200,000
55 per cent mortgage: £275,000
Minimum income requirement for £275,000 mortgage: £61,000