Are you considering buying a house or flat in London? This could be the opportunity of a lifetime and there is some great London Help to Buy schemes out to make your homeowner dreams a reality.
There are plenty of opportunities out there, you just need to know where to look, what to buy, how to buy, and understand your budget. Every penny counts in a competitive market.
London is a world-leading city and could be the perfect place for you if you want to find your forever home!
Average house & Flat prices in London
According to Which ‘London is the most expensive place to buy a home in the UK by a considerable distance. On average the house price in London in December of 2020 was £496,066, which is almost double the average in the UK usually.’
In a city like London, it is difficult to get on to the property ladder, especially when prices are significantly higher than anywhere else in the UK. First time buyers in London put down a large lump sum of money on their house deposit, and again it is twice as much as the average first time buyer deposit of around £57,278 compared to a whopping £130,35 according to Halifax.
Housing schemes for first-time buyers
London Help to buy
London Help to Buy scheme is one of the few ways that you can get financial help when buying properties in London. The Help to buy scheme in London is a lot more generous than Help to Buy schemes elsewhere in the UK, as in London you can put down a 5% deposit and borrow up to 40% of the property price from the government and take out a mortgage on the remaining 55%, potentially unlocking lower interest rates and improving your chances of getting accepted by a lender.
Due to London being an expensive place to buy a home, Shared Ownership schemes are very popular. As buyers simply are unable to afford properties at the full price. As stated by the London Assembly ‘Shared ownership is when buyers purchase a share of between 25% - 75% in a property and they then pay rent on the remainder. The share can be increased later, this is known as ‘stair casing.’ It allows you to eventually build up full ownership of the property. The Shared Ownership scheme can be very expensive in the long run; therefore, you need to ensure to get an in-depth understanding of how much it will cost before deciding. Remember to take your mortgage payments, rent, and any service charges into consideration with this one before making your final decision.
London Living Rent
London Living Rent is an affordable housing scheme designed to help middle-income Londoners onto the property ladder. The properties which will be of option to those who chose this scheme will have lower market rents, allowing you to save leftover cash each month. Which allows you to build up a deposit that will enable you to buy. During your time living in the property, you will be given the option to buy the property on a shared ownership basis.
Although to apply for the London Living Rent scheme you must:
- Be renting in London
- Have a household income of up to £60,000
- Be unable to currently buy a home in your local area, even though shared ownership
How much can you borrow?
When deciding to buy a house/flat in London it is important to get an understanding of how much you will be able to borrow if needs be. Usually, banks will allow you to borrow up to 4.5 times your total annual income. For example, if you have an income of £20,000 and you are buying alone, you will be able to borrow £90,000. Although if you are buying with a partner with the same income the amount you will be able to borrow would be, £180,000.
A mortgage lender will also consider many factors such as:
- Personal circumstances
- Credit rating
- Average spending
- Debts that you may owe
It would then be worthwhile to speak to a mortgage expert for an accurate, more personalised view on how much you will be able to borrow, you can do this @MortgagePropeller.
Choosing Where to Live in London
This can be a tough decision for anyone choosing to buy a home or a flat in London, as the prices may vary depending on how far away or how close you are to the city.
It is important that you research the area, which is of most interest to you, and work out how far away it is from your daily activities such as work, gym, etc. You don’t want to live too far out and spend lots of unnecessary money on commuting each day, as this is only a waste. As you will be saving money for your mortgage payments etc
The Covid 19 pandemic has had a massive impact on where buyers are deciding to live, as before Covid 19 people would have loved living outside of the city. Although people are missing the city life and are more likely to choose a property closer to the city now than ever before. So, ask yourself where in London would you like to live? Get searching today.
Want some more advice on buying a house or a flat in London? Connect with an FCA-approved Mortgage Expert via Mortgage Propeller! Get started here.