The Government is making further changes to its Open Market HomeBuy scheme to help thousands of people buy their first home.
There are three Open Market HomeBuy products under existing rules – a product in partnership with Nationwide Building Society (Halifax pulled out of the scheme earlier this month), another in partnership with Yorkshire Building Society and a third Government-only product.
The schemes are aimed at social tenants, Key Workers and other priority first-time buyers and each offer homebuyers different levels of equity loan to help fund their purchase. The schemes haven’t been particularly successful so far and the Government has had a tendency to launch new schemes that undermined the previous offerings. As a result, support from mortgage lenders has been understandably weak.
All these schemes will be replaced by two new products from the 1st April. The new products are:
‘MyChoiceHomeBuy’ offers an equity loan of up to 50% of the value of the property, which can be used with any conventional mortgage.
‘Ownhome’ offers an equity loan of between 20% and 40%, with the mortgage being provided by the Co-Operative Bank.
Overall, these new schemes could help more people into home ownership as they offer homebuyers a larger equity loan – the previous maximum was 32.5%. The Government has set itself a target of delivering 70,000 new affordable homes each year by 2010/11 and these new schemes will need to be more popular than their predecessors if this target is to be met.
Useful links: www.communities.gov.uk - the Government department responsible for housing