The Homebuy Scheme
Many first time buyers depend on family and friends to secure a deposit for their first home or a first buy to let property. The Government has recently introduced the Homebuy scheme. The scheme helps social tenants, key workers and other first time buyers to buy a share of a property and thus enabling them to get on the ladder.
The Homebuy products available are:
Open Market Homebuy – the buyer needs to raise finance equivalent to 75% of a property on the open market. The government and selected lenders each fund up to 12.5% of the cost of the property. Interest payments to the lender start after 5 years whilst the loan provided by the government is interest free. When the buyer sells their home or ceases to be a key worker, the same percentage value of the home will be paid back. Buyers are assessed by HomeBuy agents who are employed by local housing associations. The agents handle the whole administration project.
Social Homebuy – Housing association and local authority agents who do not ave right to buy status, right to acquire or cannot afford these schemes can buy a minimum initial share of 25% in their rented home with a pro-rata discount of up to £16,000. The remaining share is owned by the landlord who levys a charge of up to 3% of the capital value of their share of the property onto the tenant.
New Build Homebuy – this is similar to social Homebuy but involves only new build property. The buyer can ‘staircase’ – whereby they have the opportunity to buy further shares in their home at market value.
Success of these schemes – Out of the 60,000 buyers that have applied to the above schemes only 11,000 were helped by the Homebuy scheme.
Think carefully before securing other debts against your home.
Your home may be repossessed if you do not keep up repayments on your mortgage.
The overall cost for comparison is 7.1% APR. The actual rate available will depend upon your circumstances. Ask for a personalised illustration. There may be a fee for the mortgage advice. The precise amount will depend on your circumstances, but we estimate it will be 1.5% of the loan amount with a minimum fee of £500 added on to the loan.
Mayfair Consulting Limited is an Appointed Representative of The Mortgage Times Group Limited, 279 Tottenham Court Road, London , W1T 7RJ , which is authorised and regulated by the Financial Services Authority no. 303007.
