If the home in the example above sold for £210,000, you would get £168,000 (80%, from your mortgage and the cash deposit) and you would pay back £42,000 on the loan (20%). You would need to pay off your mortgage with your share of the money.
For more information (including advice on fees and paying back your loan), please download our Help to Buy: equity loan buyers’ guide.
To reflect the current property prices in London, from 1st February 2016 the Government will increase the upper limit for the equity loan it gives new home buyers within Greater London from 20% to 40%.
With London Help to Buy you’ll need to contribute at least 5% of the property price as a deposit, the Government will give you a loan for up to 40% of the price and you’ll need a mortgage of up to 55% to cover the rest.
Aldermore, Bank of Scotland, Barclays, Halifax, Leeds, Lloyds, Nationwide, NatWest, Royal Bank of Scotland, Santander, Teachers and TSB are some of the lenders offering London Help to Buy.
Example: Equity Loan of 40% on property value of £400,000