Help Finally At Hand For First Time Buyers
With the introduction of the UK Government’s Open Market HomeBuy scheme, finally help is at hand for first-time buyers who are currently struggling to get on the UK’s increasingly expensive housing ladder.
Although supposedly designed to assist “low income” earners in the UK, notably those in public service like nurses and teachers who “serve” the community, the Department for Commissions and Local Government, who will oversea this new project, have made it clear that any first-time buyer in the UK is eligible to apply for assistance under the scheme.
The Open Market HomeBuy scheme has been introduced by the UK government to try and stimulate a progressively depressing first-time buyers market in Britain, where more and more first-time buyers are needing assistance to get on the housing ladder.
Any property purchased under the scheme will be bought on a “shared equity” basis. Each purchaser is required to fund 75% of the property’s purchase price and the UK government and the participating lender will then split the cost of the remaining 25% of the purchase price between them on a 50/50% basis.
The real positive with this new scheme, however, comes in the fact that if the property’s value decreases over time, then it will be the 12.5% invested by the UK Government that will be affected first. Only after the value of the property has fallen by more than 12.5% will the purchaser be looking at having made a loss on the deal – and even then the first part of any loss is shared with the participating lender.
On the other hand if the property value increases, which UK properties as a whole are forecast to do, then the equity profit – the difference between the purchase price and sale price – will be split pro-rata among the parties at the rate of 75%, 12.5% and 12.5%, respectively.
In fact, the only real problem with the scheme is that you need to have saved up £3,500 to qualify under the scheme. Also, if you qualify under the scheme as a “priority” worker and then decide to go through a career change, you will need to repay the UK Government’s invested portion (12.5%) when you leave your job.
Nonetheless, the scheme does look attractive for those young Brits really struggling to get on the UK housing ladder and with no other assistance to call on. All that’s needed now is to make sure that more UK home mortgage lenders catch the community spirit and sign-up to participate under the scheme.
Richard Smith
4th October 2006
More Information:
- Open Market HomeBuy - more information on the HomeBuy scheme
- Housing advice from Advice Guide
- Shelter: Advice online
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