Property Buying Guide
Open Market HomeBuy and Equity Loans
In 2006 a new HomeBuy scheme was introduced by the government to create a simpler and more streamlined system designed to help first time buyers onto the first rung of the property ladder. The scheme is part of the government's Key Worker Living Programme and as such, only applies to those first time buyers who can be considered key workers, to be in housing need and social tenants.
There are three different parts to the HomeBuy schemes but the the two main ones are:
New Build HomeBuy. Here,you buy a share of a property from a housing association, typically 50%, and pay rent on the rest. See our shared ownership section.
Open Market HomeBuy. With this scheme you buy from 50% of a property yourself with Open Market HomeBuy mortgages available on the open market and the remaining percentage with the help of an equity loan.
The great thing about Open Market HomeBuy is that as the name suggests it is applicable to any property on the UK market so an Open Market HomeBuy property is not one selected by the government or the Open Market HomeBuy mortgage lender. It means you can buy any property you can afford.
From 1st April 2008, the Open Market HomeBuy scheme is being revamped and two new products, part of the government's Open Market HomeBuy initiative, offer key workers and other first time buyers access to an equity loan of up to 50% of the property's value. Eligible applicants have a choice between finding their own mortgage or picking a competitive deal through The Co-Operative Bank. The Government is also offering £1500 grants to help with legal fees and furniture.
Ownhome
is provided by a partnership between Places for People and The Co-operative Bank. Ownhome gives people the chance to take up to 40% of the value of the property in an equity loan from Places for People. They would pay nothing at all for the first five years on the equity loan. After these five years, a low rate would be paid on the sum – starting at a fixed rate of just 1.75% interest per year for the next five years, and then increasing to 3.75% interest per year from year eleven. The remainder would be funded through a conventional mortgage with The Co-operative Bank. There will be no premium or extra charges on the mortgage, and customers can choose from a range of competitive deals including fixed rate and tracker options. Customers can apply for Ownhome through their local HomeBuy Agent, or directly on the Ownhome telephone line 0845 607 0110.
MyChoice HomeBuy
enables applicants to apply for a mortgage with any lender they choose. The scheme would provide them with up to 50% of the value of the property as an equity loan. The remainder would be funded through a conventional mortgage with a Financial Services Authority regulated lender. They would pay a lowrate of 1.75% per annum on the equity loan funded by one of eight housing associations who are acting as equity loan providers*. The rate they pay on the standard mortgage would depend on the deal selected through the mortgage providers.
With both products, no deposit is required, but is allowed. When the property is sold, the equity loan provider will be entitled to a share of any increase in the value of the property.
If you want to find out if you can obtain a Open Market HomeBuy mortgage, you should contact a good mortgage advisor for mortgage advice. To find out if you qualify for your local Open Market HomeBuy scheme you should contact your HomeBuy agent.
To find out more about Open Market HomeBuy go to our Shared Equity Guide.
These schemes are designed primarily but not exclusively to help those employees classed as key workers.
There is a great deal more information about New Build HomeBuy, shared equity, how to find out if you are a key worker and how to contact your local HomeBuy agent in our shared equity guide.
Useful websites:
www.communities.gov.uk/ – the government's main site with information about housing
www.direct.gov.uk/ – offers a range of government information and services, including for housing
www.housingcorp.gov.uk/ – for more information about housing associations
Some local Shared Equity Open Market HomeBuy agents:
Open Market HomeBuy Agents for Open Market HomeBuy in London, Northampton, Birmingham, Bristol, Camden, Croydon, Dorset, Essex, Hampshire, Kent, Berkshire, Surrey, Sussex, Oxford, Cambridge, York, Leeds, Nottingham, Leicester, Manchester, Liverpool, Bath, Guildford, Canterbury, Bedford, Hertfordshire, Bedfordshire, Scotland, Edinburgh, Northern Ireland, Rest of UK
Most useful and most popular pages on this site:
Look for your First Property l Seek First Time Buyer Mortgage Advice l See our Best First Mortgages Comparison Table l Find out about First Time Buyer Mortgages l Find out How to Buy a House l Learn all about The First Time Buyer Mortgage l Shared Ownership
If you're looking for a short cut to your first home, we recommend you look closely at the following three options.
1 Consult a mortgage advisor to see if you can afford it on your own.
2 See if there are any new-build bargains in your area
3 If you still can't afford what you want, speak to your parents about how they can help and revisit the above options with their input taken into consideration