The Open Market Home Buy Scheme
The HomeBuy initiative was developed in an attempt to help a potential home owner get on the property ladder even if they could not afford to buy their own property.
With the HomeBuy schemes the buyers purchase a share of the property rather than the whole house. The Open Market HomeBuy scheme comprises of three products - one product is in conjunction with the Government, one product is in conjunction with the Government and one of three private lenders and the third product in conjunction with the Government and Yorkshire Building Society.
What is the Product in Partnership with the Government Alone?
The product in partnership with the Government gives potential buyers the chance to borrow up to 17.5% of the purchase price. This is in addition to the mortgage they will take out. With house prices so extortionate at present often the average mortgage lender will not be able to offer a loan large enough to buy a house. With the additional equity loan from the government the size of the mortgage needed decreases and therefore the borrower is more likely to find a lender willing to lend the suitable size mortgage.
What is the Product in Partnership with Private Lenders?
There are three private lenders which participate in the HomeBuy scheme. They are Halifax Intermediaries, Nationwide and Advantage. With the product in partnership with one of these private lenders the lender would provide an equity loan of 12.5% of the purchase price while the Government will provide an additional 12.5%. This means the potential home buyer only has to come up with 75% of the purchase price. It is much easier to borrow a mortgage at 75% loan to value than it is 100%.
What is the Product in Partnership with Yorkshire Building Society?
The product in partnership with Yorkshire Building Society offers the largest loan. Yorkshire Building Society will offer a 15% equity loan while the Government will offer an additional 17.5% equity loan. The means the borrower will only need to get a mortgage for the remaining 67.5% of the property value.
There is no charge on any of the products except the Yorkshire Building Society Loan which includes a charge of 3% after the first five years.
If your property increases in value once it is sold the loan providers i.e. the Government and Yorkshire Building Society or Advantage/Halifax Intermediaries/Nationwide, will be entitled to a share of the increase.
Who can Apply for Open Market HomeBuy?
Open Market HomeBuy is not available to everyone. If you are a council or housing association tenant, a key work (i.e. you work in the public sector), are on a waiting list for social housing or you are classed as a 'priority' first-time buyer by the Government then should be eligible.
How do I apply for Open Market HomeBuy?
If you are eligible to apply and would like to consider Open Market HomeBuy then you will need to speak with your local HomeBuy agent. You can find your agent by visiting the Government website.