First Time Buyers Mortgages

Shared Equity Mortgages

What are Shared Equity Mortgages?
There are one or two private schemes that are not yet fully established but the main one is the Government's Open Market HomeBuy shared equity scheme:

Government scheme for Key Workers:
The two new (March 2008) 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.

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 yearson 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.

To apply for the scheme, you will have to register with your nearest HomeBuy agent before applying to the lender. Contact your HomeBuy agent.
 
Shared Equity Mortgages – Advantages
Shared equity is one of the most affordable ways to get a foothold on the property ladder.
Interest rates are very favourable.
Schemes for key workers.

Shared Equity Mortgages – Disadvantages
The HomeBuy scheme is not available to everyone and long waiting lists are expected. 
If you leave the required profession you will have to repay the equity loan within two years.
When you come to sell the property, as you will not own 100%, you may face affordability problems when looking for your next home. 
 
Lenders specialising in HomeBuy Shared Equity Mortgages
Many lenders

Shared Equity Mortgage Advice
For personal advice on sheared equity mortgages contact a mortgage advisor for no-commitment, specialist, friendly mortgage advice.

Features, advantages and disavantages of specific first time buyer mortgages:

100% Mortgages l Cashback Mortgages l High LTV Mortgages l Graduate Mortgages l Professional Mortgages l Mortgages with Parents l Guarantor Mortgages l Family Offset Mortgages l Mortgages with Friends or Family l Mortgages at University l Rent a Room Mortgages l Affordable Mortgages l Interest only Mortgages l Part Repayment Part Interest Mortgages l Interest-free Start Mortgages l Shared Ownership Mortgages l Poor, Adverse or Poor Credit Mortgages l Key Worker Mortgages l 30, 35, 40 Year Term Mortgages