The latest buying scheme for affordable housing

What is Help to Buy? If you would like a five-year interest-free loan — then read on
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Altitude in Aldgate
From £515,000: apartments at Altitude in Aldgate. The minimum deposit is £20,600 (020 7264 0170)
Home buyers are beginning to wake up to the Government-backed Help to Buy scheme that offers help with deposits on new homes priced under £600,000.

Momentum is growing as developers launch houses and flats that qualify for the scheme and lenders unveil new mortgage deals.

The equity loan provided by government is interest-free for five years. From year six, it attracts interest of 1.75 per cent, rising annually by RPI inflation plus one per cent.

"Schemes like this always take a while to bed in," said Stephen Stone, chief executive of developer Crest Nicholson. "It took time for the finer details to emerge. But by overcoming the deposit hurdle, many more people will be able to get on the housing ladder." The Treasury estimates that up to 74,000 buyers will be helped by the £3.5 billion made available under the scheme.

Barratt reported that 9,000 people in London have been in touch about Help to Buy, and predicted that enquiries will jump over the summer.

Overcoming the deposit hurdle is a huge attraction in London where first-time buyers typically have to put down £60,000 to £80,000. At Barratt's St Andrews development in Bow, Help to Buy purchasers need minimum savings of £11,120. Apartments in the latest phase — Number One The Plaza, a jazzy 27-storey tower — cost from £278,000. Call 020 7515 5788.

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At Altitude in Aldgate, where flats are priced from £515,000, the minimum deposit required is £20,600. Call 020 7264 0170.

"Metro pads" priced from £199,999 are available at a development called Walthamstow Central, part of a regeneration of the train station area. Call estate agent Strettons on 020 8509 4457. Up-and-coming Walthamstow is one of London's cheapest locations and investment-wise looks a good bet as the area is served well by transport — Zone 3 on the Tube and quick Overground trains into the City (17 minutes).

Help to Buy homes are for sale at King's Island, Uxbridge, where developer Weston Homes has converted a flourmill on the banks of the Grand Union Canal. Prices from £201,995. Call 01895 232049.

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Buyers aiming to take advantage of Help to Buy are being urged to consider how and when they will repay the government equity loan. Most are likely to repay it when they sell the property. But it could then be higher, because the loan is not a permanent fixed sum, rather it is an equity loan based on the value of the property. If on resale the property has increased in value, the amount to be paid back to the Government will be proportionately higher. In other words, the Government shares any profit.

Take someone buying a £300,000 property with a £225,000 mortgage and using five per cent savings and receiving a £60,000 equity loan. If the property sells for £340,000, the equity loan would have increased to £68,000. Under this scenario, after paying off the mortgage and equity loan, the buyer would be left with £47,000, minus estate agency and other fees. A reasonable outcome.

Buyers must apply through participating housebuilders and HomeBuy agents. Visit for more details.

Help to buy rules

* Only new build homes valued up to £600,000 can be bought.
* Buyers need to raise a deposit of at least five per cent of the value of the property they want to purchase, but can borrow 20 per cent more on an interest-free basis. The maximum equity loan available is £120,000.
* Local HomeBuy agents assess your finances to see if you can contribute more to the deposit.
* The equity loan must be repaid when the property is sold, or within 25 years.

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