Revamped government-backed home buying scheme

Helping people into home ownership

Thousands of key workers and other first-time buyers should benefit from a revamped government-backed home buying scheme that will enable a family with an income of £32,000 to afford a £200,000 home, ministers said recently. The government has launched an initiative allowing teachers, nurses and others to take out a mortgage for as little as 50 per cent of the cost of the property they are buying.

The government's strategy for helping people into home ownership is primarily for key public-sector staff working in health, education or community safety in areas where high house prices are affecting recruitment, social tenants and those on the housing register, and other "priority" first-time buyers.

The new offering is called MyChoiceHomeBuy and is for individuals that find the home they want to buy and take out a regular mortgage from any lender they choose for as little as 50 per cent of the property's value. The remainder of the purchase is funded via an "equity loan" of up to 50 per cent of the price, with half of the money for this coming from the government and the other half coming from a consortium of eight housing associations. The individual pay’s interest on the equity loan from day one, though this "rent" will initially be set at only 1.75 per cent per annum, rising to RPI inflation plus 1 per cent.
No deposit is required, but buyers can put one down if they are able to and when the property is sold the provider of the equity loan will be entitled to a share of any increase in its value.

The government said this new product would allow buyers to shop around for the best mortgage for their needs, is simpler to arrange than previous products, and gives people more buying power. "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," said a spokesman.