First time buyers in London have been given assistance to help them to get onto the property ladder. The “London Help to Buy” scheme will provide a leg up for borrowers who are struggling to borrow sufficient money due to a low annual income.
The scheme will only be available to those who buy a new property in the Capital. Once buyers have five per cent deposit saved, the government will provide an interest free loan for 40% of the cost of the property which is repayable over five years, while the borrower has to secure a mortgage for the remainder of the balance.
The Chancellor, George Osborne, stated that he realised that property prices in London were far higher than other areas of the UK, and the scheme was being introduced to help those struggling to afford their first home. As the Help to Buy schemes have become popular in the UK, with the number of first time buyers increasing by 60%, the initiatives have had very little impact in London due to the rapidly increasing prices.
Outside London, if the interest free loan isn’t repaid within the five years, it attracts a fee at a rate of 1.75%. This amount will increase annually at 1% above the inflation rate. The fees are payable in addition to the mortgage repayments and must be repaid at the end of the mortgage term or when the property is sold.
With various schemes available to make it easier for first time buyers, a mortgage adviser may be required to provide suitable advice. Thanks to being CeMAP qualified, advisers have knowledge of all the schemes.