Aldermore is offering a Help to Buy London deal, which provides an equity loan of up to 40 per cent for buyers trying to get on the property ladder in the capital.
From 1 February, the bank is offering a two-year fixed rate product with an interest rate of 3.98 per cent for up to 75 per cent loan-to-value (LTV).
Barclays, Bank of Scotland, Halifax, Leeds Building Society, Lloyds, Nationwide, NatWest, Royal Bank of Scotland and Teachers Building Society will also be offering Help to Buy London mortgages from launch.
Announced by chancellor George Osborne in the Autumn statement, the Help to Buy London scheme is identical to the existing Help to Buy scheme, apart from the size of the government equity loan.
Help to Buy London’s equity loan can be up to 40 per cent in the London scheme, compared with 20 per cent for the rest of England version of the scheme.
The scheme allows first and second-time buyers to purchase new build properties in London up to a maximum value of £600,000 with a maximum loan of £450,000.
The overall cost for comparison is 5.4 per cent APR with a £999 completion fee and no booking fee.
An early repayment charge of 3.5 per cent applies in year one, and 3 per cent in year two.
Mike Pendergast, IFA at Zen Financial Services, said: “Seems a bit high for a 75 per cent LTV mortgage. You would expect a lower interest rate and lower early repayment charges as well.”