Sadiq Khan calls for Help to Buy loans grace period extension

Under the Help to Buy scheme, first-time buyers in London can borrow 40% of the purchase price interest-free for five years

London's mayor has called on the government to extend the interest-free period on Help to Buy loans to help those facing increasing costs.

First-time buyers who took out a loan on the government's scheme were given a five-year grace period during which they did not have to pay interest.

Sadiq Khan has called for this fee-free period to be extended, saying it would give people "breathing space".

The government said supporting homeowners was a "priority".

"The Help to Buy equity loan is interest free for the first five years and, afterwards, a monthly interest fee of 1.75% of the loan is payable, which is a significantly lower rate than current mortgage products," a spokesperson for the Department for Levelling Up, Housing and Communities added.

Under the scheme, first-time buyers in London can borrow 40% of the purchase price interest-free for five years.

According to City Hall data, a typical London first-time buyer who bought their home through the initiative in 2017-18 will pay an extra £638 on mortgage repayments, plus an additional £275 to the government in extra Help to Buy payments.

Mr Khan said extending the interest-free period for a limited time would "give people breathing space when they need it most".

Previous polling for City Hall revealed one in three Londoners said they would struggle to pay their mortgage over the following six months.

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