The Open Market HomeBuy Scheme

jenz

My daughter has read about 'The Open Market HomeBuy Scheme' and has asked me to find out more about it - to be honest I am totally confused at what it is offering, he web site suggests contact an agent - but I would like to find out some facts about the scheme first, as it is reported that very few have actually taken up the scheme.

She is looking to buy a property of £100k and has £10k deposit but her salary doe not give her quite enough multiples for the 90k needed. She has put her name on the council housing list so we presume she would fall into one of the eligible goups that is required.

Could someone give me an illustration of the repayment costs each month of this scheme and if anyone taken one of these out, what are the downfalls of the scheme? I cannot find any small print anywhere on line about this scheme.

many thanks

herbiesjp

Have you spoken to any of the lenders listed here?:

http://www.housingcorp.gov.uk/server/show/ConWebDoc.8662

Chai_2

http://www.housingoptions.co.uk/ho2/ho2/facts.asp
This is a link to the various schemes including the open market home buy.

There is a booklet tha they can send you. Also look at the first time buyers initiative which is a little more flexible for some.

I am looking at these schemes to.
It looks like a really good scheme not sure why there is a low uptake.

Can anyone spot any obvious pitfalls?

toonfish

Chai wrote: »

http://www.housingoptions.co.uk/ho2/ho2/facts.asp
This is a link to the various schemes including the open market home buy.

There is a booklet tha they can send you. Also look at the first time buyers initiative which is a little more flexible for some.

I am looking at these schemes to.
It looks like a really good scheme not sure why there is a low uptake.

Can anyone spot any obvious pitfalls?

there aren't really any pitfalls - the take up is very low because eligibility is so restricted. Most people looking to buy their first home aren't on a HA list, or in council property.

Bargain_Rzl

toonfish wrote: »

there aren't really any pitfalls - the take up is very low because eligibility is so restricted. Most people looking to buy their first home aren't on a HA list, or in council property.

But as far as I know (and it may vary by local authority) there's nothing stopping anybody putting themselves on a HA list.

When I applied for my flat, I had to be registered with Housing Options (which pools the London HA lists) as well as living in the right borough and being in the right income bracket - but registering with Housing Options was as easy as filling in a form online and then waiting for it to be officially accepted.

It is true that the choice of SO property is limited for anybody who is not a keyworker or an existing council tenant - but HA lists should not, in themselves, stand in a person's way. Some schemes also state you have to be in "priority housing need" but that can simply mean that you are currently living with family or in a houseshare.

Taadaa

Bargain_Rzl wrote: »

It is true that the choice of SO property is limited for anybody who is not a keyworker or an existing council tenant

I was neither on any social housing list or a key worker when I was accepted for SO. The criteria specified we had to be one of a few things, which included being a first time buyer. I believe this is still the case for some HAs offering SO in the south east (London and Quadrant, ?South London HA)

toonfish

Taadaa wrote: »

I was neither on any social housing list or a key worker when I was accepted for SO. The criteria specified we had to be one of a few things, which included being a first time buyer. I believe this is still the case for some HAs offering SO in the south east (London and Quadrant, ?South London HA)

It looks like every area has different criteria - it even seems to vary between Housing associations in the same area.

Liz33

Every area does have a different criteria but mainly the open market homebuy is only open to council/housing association tenants or keyworkers. It enables you to find a property on the open market and get a loan towards this which is repayable when you sell.

The rules have slightly changed I think interest will be charged on the loan after 5 years but not sure what rate etc. Your local zone agent should be able to give you all the facts without tying you into anything.

And the benefit to this over shared ownership is you have no monthly rent and you get to chose your own property. Definitely worth a look

:T

wen12

You don't have to be in HA or council property to get on these schemes but you have to be a first time buyer. In our area there are huge waiting lists for schemes like this

Unclebob_3

Hiya,
I have currently had an application approved for the open market home buy scheme. I asked lots of people lots of questions but no one seems to know much about these schemes. After doing a bit of research I came to the conclusion that the scheme has pros and cons and it just depends on your circumstances as to whether it is a good idea or not.
In summary, the drawbacks are as follows:
1. 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.
2. 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 can be stressful.
3. 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.
4. At some point you are probably going to want to pay off the equity loans. What are you going to pay them with?

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!