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Making sense of Mortgages and London Help to Buy

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21 February 2020 | Lifestyle

Buying a home is the largest purchase anyone is likely to make in their lifetime. Most people will need a mortgage in order to allow them to put roots down. The process can feel complicated to some, but it doesn’t have to be…

What is a mortgage?

A mortgage is a loan that is taken out to purchase property or land. There are plenty of lenders that provide mortgages, normally with standardised criteria and terms, even though this can vary from lender to lender. Buyers can either contact their local building society or banks, or alternatively, they can speak with financial advisers.

Review your finances

Before buyers set out to apply for a mortgage, or even make an offer on a new home, it’s really important to work out exactly what they can afford. Reviewing finances honestly, considering every bill, debt and cost, including new ones that come with owning a home, is vital.

Raising money for a deposit

Saving for a deposit can be a big hurdle to overcome. The rule of thumb is that the larger the deposit amount put towards the purchase of a new home, the better the mortgage deal and lower the interest rates.

What some homeowner-hopefuls may be surprised to learn is that the amount they have already saved may be enough for a deposit. The amount needed for a deposit varies depending on what, where and with whom a buyer would like to make their purchase. No matter how much buyer’s have saved, we always recommend that they call us or pop into one of our Sales and Marketing Suites for a chat to find out what options are available to them.

London Help to Buy

The Government-backed London Help to Buy scheme was created in a bid to assist first time buyers who aim to get on the property ladder in the capital. The scheme enables these buyers to purchase a new-build home with only a 5% deposit, a 55% mortgage and an equity loan of up to 40% of the property purchase price. What’s more, the amount borrowed as the equity loan remains interest-free for five years, as long as the deposit has been paid.

There are certain terms and conditions with London Help to Buy; the purchase price of the new-build property must be no more than £600,000, the scheme can’t be used to purchase a second home or a property to rent out and only a repayment mortgage can be taken out.

As of 30th November 2019, the Help to Buy: ISA closed to new applicants, meaning that only buyers with an existing ISA of this kind will be able to benefit from the scheme. For the buyers who opened an account before this date, they will be able to keep saving into their accounts until 30th November 2029, when additional contributions will end.

While the current scheme will come to an end in March 2021, the Government will be replacing it with a brand-new scheme in April 2021, so watch this space…

Seek financial help

We previously mentioned how financial advisers can help find a good lender, but they’re also there for general advice and to assist with buyer queries. From the initial quotation and mortgage in principle, through to completion on a property, they’re there to guide buyers through the home-buying process.

Whenever we assist our buyers with the purchase of one of our homes, we always recommend our trusted mortgage advisers, Torc24. They specialise in new build mortgages, sourcing excellent deals, low deposits and reduced arrangement fees for our buyers. 


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