Property Buying Guide

Open Market HomeBuy

What is Open Market HomeBuy and how does it work?

Open Market HomeBuy is a shared equity scheme through which the government, mortgage lenders  and other bodies help people buy a property on the open market.

The Open Market HomeBuy initiative allows the buyer to choose any property on the open market within their price range.   It is available to key public sector workers, social tenants or those on a council waiting list and other priority first time buyers including those with an anual household income of £60,000 or less. Applicants will need to contact a HomeBuy agent - a one-stop-shop providing affordable housing options across the UK - or phone the Ownhome information line on 0845 607 011

From 1st April 2008,  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. These new services replace the former Open Market HomeBuy shared equity schemes.

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.   

This means a household with an income of £32,000 could afford a house of £200,000, paying £760 each month – as opposed to £1,350 without the scheme.

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.

A £1500 grant is also available to help with moving in and purchase costs. 

Although mortgage rates are still low, rising house prices and the decline of first time buyer-specific mortgages has put pressure on people buying their first home – particularly key workers.

Contact your HomeBuy agent.

Seek shared equity mortgage advice

If you are able to buy a home through Open Market HomeBuy because you are a key worker but then leave qualifying employment, the HomeBuy agent's equity loan will be repayable within two years and possibly the mortgage lender's also mortgage.

Find out More About Shared Equity:

What is a key worker and how to apply? l What help is on offer for key workers? l HomeBuy agents

Useful Links:

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
www.nhs.uk/accommodation – information about accommodation for NHS staff
www.teachersupport.org.uk – support and advice for teachers