Mar 13 2008
Thousands of first-time buyers and key workers could see their purchasing power boosted by up to 50 per cent with new home loans announced in today's Budget.
The Chancellor announced that from April this year two new equity loans will be available through the Government's shared equity scheme Open Market HomeBuy (OMHB). The loans allow buyers to shop around for the best mortgage deals and are simpler to arrange than previous OMHB products.
Until now OMHB loans could only be taken out in chunks of 32.5 per cent, 25 per cent, or for the Government only loan, an average of 17.5 per cent of the property value. The loans were also restricted to just one specific mortgage from each of the three lenders providing the loans.
This has now ended with more flexibility in the percentage of the value of their home that can be borrowed - to a maximum of 50 per cent - and more choice in the mortgage buyers take out.
This means a household with an income of £32,000 could afford a house of £200,000, paying £760 each month - as opposed to £1,350 without the scheme.
Housing and Planning Minister Caroline Flint said: "We have already helped more than 95,000 households onto the housing ladder since 1997 through our low cost home ownership schemes. These new products will help us do even more."
"Not only will the new loans increase affordability for key workers and first time buyers, they are a lot more flexible, allowing buyers to shop around for the best mortgage deals."
The new products are:
- " MyChoiceHomeBuy - an equity loan of between 15 per cent and 50 per cent of purchase price - provided in partnership with a consortium of eight Housing Associations named CHASE - which can be used in conjunction with any conventional mortgage.
- " Ownhome - an equity loan of between 20 per cent and 40 per cent of purchase price - provided in partnership with the Housing Association Places for People and Cooperative Financial Services - which can be used in conjunction with any conventional mortgage from the Co-operative Bank.
Both loans are open to social tenants, key workers and qualifying first-time buyers. They can be used alongside a deposit and be repaid early - in part or in full - or when the property is sold.
The new products will be available from Housing Corporation HomeBuy agents from April 1 and will replace the existing Open Market HomeBuy products.
MyChoiceHomeBuy is funded 50 per cent by CHASE and 50 per cent by Government. Ownhome is funded 58 per cent by Places for People and 42 per cent by Government.