The government has launched a shared equity mortgage scheme which it claims will increase first-time buyers’ purchasing power by 25%.
The scheme, known as “Open Market HomeBuy”, is backed by four private sector lenders Nationwide, Yorkshire Building Society, Morgan Stanley subsidiary Advantage and Bank of Scotland.
It allows buyers to take a mortgage on 75% of the value of the property, with the remaining amount covered by an “equity loan” split between the government and the mortgage provider.
There are no charges on the lender’s equity loan within five years, and no charges on the government loan at all. But in return, both parties take a share in the increase in value of the property when it is sold.
Launching the scheme this morning, housing minister Yvette Cooper said that a family on a combined income of £35,000 can currently obtain a mortgage of only £122,500. Under the new scheme, it will be able to buy a home worth over £160,000.
The scheme will be available to key public sector workers, social tenants and other first-time buyers. It will allow them to buy any property on the market within their new price range.
Yvette Cooper said: “We want to help more families get a first step on the housing ladder. If you haven’t got family or friends who can help it can be hard to get started.”
“In the long run we need to build more homes to ease the pressure on house prices. But in the meantime this new mortgage deal will help thousands of families into a home of their own.”
References: EGi News 02/10/06
