Get on the property ladder with Help to Buy!27 February 2016
For cash-strapped Londoners who want to get on the property ladder, the Help to Buy scheme (covering homes valued up to £600,000) has now been made available until 2021.
Last November, the Government doubled the size of the equity loan available, from 20 per cent to 40 per cent of the home’s value. In total the Government has made an extra £2.3 billion worth of funding available. This has meant the salary needed to buy an average-price two-bedroom London property worth £465,000 came down from £56,000 to £36,000 per year. A considerable amount, which has unsurprisingly seen an increase in demand for homes across London.
Previously, buyers were faced with the near on impossible task of having to put down larger deposits as salaries were too low for lenders to approve the 75% mortgage. Interestingly, developers are reporting more than a third of sales are now backed by the Help to Buy scheme, and this is expected to increase. Importantly, lenders are launching Help to Buy mortgages with rates as low as 1.59 with offers of free legal and survey fees. As a buyer it makes sense to act quickly, especially as house prices are expected to continue upwards this year.
Although the scheme does not apply to all new housing developments, the £600,000 price ceiling alongside the 40 per cent interest-free loan has opened up the market in all travel zones. East London is where most new homes are being built and many homes are within the budget of first-time buyers. Buyers should look out for developments in Stepney, Bow, Poplar and even Hoxton!
For more on how the scheme works and areas to look out for, click here.