Homebuy Schemes

spiewak1

Hi everyone, my partner and I will soon be thinking about buying our first house. My partner is a keyworker, so we would qualify for one of the Homebuy schemes. However, I find it difficult to understand the differences between the different Homebuy schemes: Open Market HomeBuy; Newbuild HomeBuy; First Time Buyers Initiative (FTBI); and I'm sure other schemes. I have not found any information or adive on the best or most suitable schemes; I was hoping to find information on Martin's website. If anyone has experience of these schemes, then I would really appreciate your feedback. I know Martin has produced a guide for first-time mortage buyers, but how about a guide for first-time Homebuyers? Thanks, and I hope to hear from you soon; I'm sure there are many other people in our situation, and with these schemes increasing all the time, it's becoming more and more difficult to understand what scheme to consider.

Mike.

patricia1066

Hi spiewak

You may have already seen this website - there is a faq that gives you some descriptions of the schemes the Metropolitan and Tower Homes run, and deal with the questions you raised.

http://www.housingoptions.co.uk/ho2/

Hope this helps, and if you contact them direct they will be able to answer questions such as where do they source their housing stock.

Patricia

Unclebob_3

Hiya,
I am just in the process of buying a property through the government open market home buy scheme. My understanding of the advantage of this over other schemes is that you own the property outright rather than just a share in it and you have a lot more choice of properties than shared ownership and newbuild home buy which limit you to certain properties.
Although I am not a key worker, the scheme I've applied to does favour applicants who are keyworkers. Like you, I had enormous difficulty finding people who knew about the scheme so it was hard to source independent and impartial advice on this scheme compared with a conventional mortgage.

In the case of the above scheme, having asked lots of people lots of questions I came to the conclusion that it is a good scheme if your circumstances are right.
In summary, the drawbacks are as follows:
1. If you change job you may no longer be elligible for the scheme.
2. The open market home buy scheme makes it difficult for you to move house - if you do want to move you will have to repay the equity loans and (often) high early repayment charges on the mortgage.
3. If your application is successful you may have a very small timescale in which to find a suitable property (we have been given 6 weeks to find a property!). This is stressful.
4. The scheme restricts you to certain lenders for your mortgage. The four lenders have many complicated rules (as does any mortgage) but basically you probably won't be allowed to make overpayments on your mortgage for the first five years without penalty. Also, any deposit you have is used to reduce the government's equity loan rather than the mortgage for three of the lenders. The fourth lender (Advantage) will allow you to use your deposit to reduce the amount you borrow on the mortgage without reducing the government's equity loan. However, unless you have an enormous deposit, don't use this lender as their interest rates are very high in the 3rd, 4th and 5th years.
The benefits are as follows:
1. 25% of the value of your house is interest free for 5 years (although the amount you pay back is proportional to the increase or decrease in property value).
2. In the short term at least you can buy a more expensive property, which in our case means a larger property in a nicer area as opposed to the runt of the house we could afford otherwise!!
3. You can choose when to pay back the equity loans. If you are smart about this you will save and pay back the equity loans when the market is not so good - pay them back in full or in part when your house is worth least.
4. The government equity loan (12.5%) never attracts any interest.

These shemes are infinitley complicated and I have not had much joy finding people who understand them, so I wish you luck!

Let me know how you get on!