Leeds Building Society will launch its range of new Help to Buy London mortgages when the government scheme goes live next month.
In the Autumn Statement, the chancellor George Osborne announced Londoners with a 5 per cent deposit will be able to get an interest-free loan worth up to 40 per cent of the value of a new home.
Currently, if you are able to pay at least 5 per cent the value of your home as a deposit, the government will lend you up to 20 per cent of the rest of the value of the property, alongside your mortgage of up to 75 per cent.
The Equity Loan scheme will be now available until 2021, and to reflect the current property market in London, from early this year the government will increase the upper limit for the equity loan it gives new buyers within Greater London from 20 per cent to 40 per cent.
Leeds is set to be among the first lenders to join the initiative, with director of business development Martin Richardson stating it makes Help to Buy a practical solution in London, where the average house price is almost 18 times the average salary.
This figure is based on the average house price in London being £531,000 according to the Office for National Statistics in October, while the median average annual salary in London was £29,868.
Mr Richardson said: “Affordable housing in London has typically relied on shared ownership and Help to Buy London complements our extensive range of shared ownership mortgages, providing additional choice for consumers.”
Leeds Building Society has been part of the original Help to Buy equity scheme since summer 2013 and last year became the first lender to accept remortgage applications from Help to Buy equity borrowers.