Everything you need to know: how Help to Buy works in London

About 18,000 Londoners have bought a home using the Government's Help to Buy scheme. Here's how it works.

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Ruth Bloomfield27 July 2018

With Help to Buy London, buyers can put down a five per cent deposit on a new home, take a 40 per cent government loan and get a mortgage for the 55 per cent balance.

If you were spending £500,000 this would mean finding a deposit of £25,000, taking a government loan of £200,000 and getting a mortgage of £275,000.

Banks generally allow you to borrow around three-and-a-half times your income, so a £500,000 home would require an annual household wage of just under £80,000.

The maximum you can spend under Help to Buy London is £600,000.

Put down £22,000: for a studio worth £440,000 at 500 Chiswick High Road

For the first five years you simply pay your mortgage each month, plus service charges on new-build homes.

In the sixth year you start paying interest on your government loan, at 1.75 per cent, growing yearly in line with inflation.

When you sell up, you repay the equity loan plus a share of any increase in the value, leaving you with your original stake plus the capital growth earned on your portion of the property.

The Government says the scheme will continue until at least 2021.