Key workers: open market shared ownership schemes

tubster

Hi y'all

We recently applied for a keyworker shared ownership scheme (17.5 per cent of cost of property paid by government, no interest, pay back equity when you sell) and got accepted.

But now this has been scrapped - although we could still go ahead if we complete up to September as we were accepted before April 1st.

But from 1st April, two new schemes are up and running:

MyChoiceHomeBuy - offered by big housing associations - you borrow 15 to 50 per cent of house price alongside any mortgage; pay 1.75 per cent on this loan for the first year, after that the annual interest rate is the retail price index plus 1 per cent. You pay equity loan off when you sell (or earlier if you want).

Ownhome - www.ownhome.co.uk - you get 20 to 40 per cent loan alongside a mortgage (any mortgage) from co-op bank (which you can change later if you want). You pay no interest on Ownhome loan for first five years; then 1.75 per cent p.a. for the next five years; then 3.75 per cent per year after that. On selling the house, or when the mortgage term finishes, you have to repay the loan, or earlier if you want (same percentage of equity when valued then, making this an interest only deal).

Also stamp duty is deferred for buyers who get 80 per cent of the value of their home through a government shared ownership scheme. At the moment it isn't clear how this is going to work - ie what happens when you sell/want to buy the last 20 per cent - are you whacked with a big stamp duty bill then, and for which valuation? This would be a big disincentive to pay it off.

As I don't think the existing 17.5 per cent deal will qualify for the stamp duty postponement, the Ownhome deal looks amazing in comparison...

Does anyone have any thoughts or advice about how these deals compare?

Cheers
Tubster

Alleycat

Sorry, no idea of how these compare right now as I've got a banging headache, but just wanted to say THANK YOU SO MUCH!!! for posting about these new schemes!!

We were hoping for Open Market Homebuy but where not eligible by about £1000 but the Own Home thing we are eligible for!

tanikk£

tubster wrote: »

Also stamp duty is deferred for buyers who get 80 per cent of the value of their home through a government shared ownership scheme.

As I aware these schemes are not considered as shared ownership for that purpose. You get a loan from goverment, but own 100% of the property. In contrast to normal Shared Ownership schemes where you buy a part of the property and the second part is owned by HA, subject to rent payments. This apllies to former OMHB at least, and the new ones seem to be based on the same principle ...

happypig

I'm looking for anyone that has been aproved for the MyChoiceHomeBuy scheme or knows how the HA loan is calculated.

I've been told that I have been approved but the letters have not been issued yet - new system, blah, blah. I'm specifically looking for the answer to this one question as the website for my local HA (and others) is vague in the extreme!

Assuming 50% loan - Does the HA match in £s the mortgage offer that the buyer secures for the property, or do they match the total contributions (i.e. mortgage and deposit)?

I ask as I have a substantial deposit (over a third) but being a P/T working mum of two children can only raise a mortgage equal to around a sixth of the price that I am looking to buy at. Therefore, the scheme could be either a Godsend or a chocolate teapot for me!

Anyone know? I'm a little desperate to find out as I may have to leave my privately rented flat in a few months unless I can buy it.

Cheers.

brit1234

I love the way that government always use RPI for key worker homes yet pay rises are below CPI. Its one big scam.

talliedebtbuster

HI there i just put a post on this too!!

Im a little confused too with how it all works. The thing that worries me is the first time buyer inititive, a one bed flat here in south london is 200k. I think that is stupid. Would you pay that? Its not even that big! Im thinking of the own home thing, but the thing is, where will we get the income to cover those interest payments each year? My salary only increases by 1 or 2% a year not 3.75!!!

Tallie

happypig

Exactly, Taille, which is why I won't look at that scheme! That said, I think (be great if someone could verify!) that the flats are sold at market price, i.e. lower than the price they are marketed by their selling agents. I can't find the flat that I was looking at now, as an example, but the scheme was assuming a market value of 240K whilst they were being marketed at 275K by selling agents.

Also, some agents around here are running their own schemes. I wouldn't touch them with a barge pole - Puchase 50% and the rest has to be puchased at THEIR value within 10 years... or you sell up! Yikes - dangerous!