To qualify, all you will need is a 5% deposit and a 55% mortgage from a bank or building society. The balance of up to 40% will be covered by a government equity loan. This equity loan is interest-free for the first five years.
What happens after the 5 years interest-free loan ends? After five years, the equity loan will be subject to a fee of 1.75% per annum on the outstanding amount, and from then on the fee will rise each year in line with any increase in Retail Prices Index inflation (RPI) plus 1%.
You can choose to make voluntary repayments of the equity loan, at prevailing market value, at any time. This would mean that when you come to sell your property you won’t owe the government anything, but if you don’t make any repayments, you’ll need to pay back the equity loan when you sell your home.
To learn more or to connect with Living in London's trusted mortgage advisor, please get in touch on 020 7231 0002 or fill out this form here.