The Open Market HomeBuy scheme for cash-
strapped first-time buyers
This
is one of several Government-backed schemes to help workers
on a low income buy a home of their own.
Basically, it provides access to additional low-cost
funding, to add to a mortgage, so even if you don't have a deposit
you can afford a property.
Other initiatives, known as the Social
HomeBuy and New
Build HomeBuy schemes, allow you to buy part of a property
in association with a landlord, while paying an affordable rent
on the rest.
There are two versions:
With the original scheme, known as expanded Open Market
HomeBuy, you buy in partnership with your lender and
the Government.
With the newer Government-only Open Market HomeBuy
scheme, it alone provides the extra finance.
The expanded Open Market
scheme
• How does it work?
You fund around 75 per cent of your purchase with an ordinary
mortgage
provided by one of the (at the time of writing) handful of participating
mortgage
lenders plus whatever savings you have.
You will be charged interest
on this loan in the normal way and make monthly repayments to
the lender.
You top this up to 100 per cent of the purchase
price with two additional loans of around 12.5 per cent each,
one provided by the same lender, the other from the Government.
The Government loan is interest-free and fee-free and is administered
by a HomeBuy agent usually a housing association.
The mortgage lender won't charge any fees or interest on its
additional loan for the first five years.
After that, it can charge interest at an increasing rate.
The Government-only Open
Market scheme
• How does it work?
With this newer scheme, you fund at least 82.5 per cent of your
purchase price with a conventional mortgage from a lender of
your choice plus any savings you have.
You make this up to 100 per cent with an interest-free and fee-free
Government loan worth up to 17.5 per cent of the value of your
home.
The maximum for this loan is £50,000 and, as before, it will
be administered by a HomeBuy agent.
How do I qualify for these
schemes?
Those eligible to apply include existing council and housing
association tenants, key workers, such as nurses, teachers and
police officers, anyone on council housing waiting lists and
some other priority first-time buyers.
What if I want to sell?
When you sell up, or decide to remortgage
to a traditional home loan deal, you repay the outstanding mortgage
in the usual way.
The amount you will have to pay to clear the additional loans
from the mortgage lender and/or the HomeBuy agent will depend
on the rise in the value of your property.
If, say, you sell your home for 10 per cent more than you paid,
you will need to repay your original debt plus 10 per cent.
If you make 20 per cent, you will need to repay an extra 20
per cent.
What else do I need to know?
You can remortgage to a different lender and remain part of
the scheme provided you get your HomeBuy agent's permission.
If you stick with the expanded scheme until the end of your
mortgage
term, you will have to repay your lender's
additional loan when you make the final payment on your mortgage.
You won't have to pay the Government part until you sell the
property.
If you qualify for one of these schemes as a key worker, but
then change jobs and lose this status, you must repay the HomeBuy
agent's loan and possibly the lender's additional loan within
two years.
• How do I apply?
For more information, contact your local HomeBuy agent.
Want
to talk
with a mortgage adviser who specialises in helping First Time
Buyers?
We can put you in contact with a professional mortgage adviser
who will find
you your best mortgage. It's free and completely
confidential. Simply fill out the form below
