Mortgages First Time Buyers Let Down By The Governments Homebuy Scheme

Mortgages First Time Buyers Let Down By The Governments Homebuy Scheme

Mortgages .​
First-Time Buyers Let Down By the​ Governments Homebuy Scheme.
Late last year,​ accompanied by the​ usual razzmatazz,​ Gordon Brown announced the​ Governments new Open Market Homebuy mortgage scheme for first-time buyers .​
Under the​ Homebuy scheme,​ first time buyers take out a​ mortgage for 75% of​ a​ home's value with no deposit and the​ Government and the​ mortgage lender will in​ practice buy the​ remaining 25% of​ the​ property .​
Then when the​ borrower eventually decides to​ sell the​ property,​ the​ borrower will receive 75% of​ the​ net sales proceeds and the​ remaining 25% of​ the​ sale price will go to​ the​ Government and the​ mortgage lender .​
In the​ mean time,​ if​ the​ owner wishes to​ buy out all,​ or​ part,​ of​ the​ Governments or​ mortgage lenders 25% interest,​ the​ borrower can simply repay the​ money the​ Government and mortgage lender initially put in.- there will be no penalty .​
In our view,​ first time buyers shouldn't become too excited about this scheme for six reasons: -
• the​ Government has recently confirmed that buyers will have to​ pay a​ 1% premium on​ top of​ the​ usual mortgage rate .​
• There has been no announcement as​ to​ the​ amount relative to​ income,​ which borrowers can qualify for .​
So at​ this stage it's impossible to​ judge what sort of​ house a​ first-timer could buy .​
However,​ we bet it's a​ very small one!
• Despite hopes that more mortgage lenders would join the​ Yorkshire Building Society,​ the​ Halifax,​ and the​ Nationwide,​ as​ co-sponsors of​ the​ scheme,​ no additional lenders have been added to​ the​ list .​
• the​ Government expects Homebuy to​ lend to​ 4,​000 first time buyers per year .​
That's only fractionally over 1% of​ the​ 361,​000 first time house purchases arranged each year .​
In terms of​ availability,​ it​ seems as​ if​ Homebuy mortgages are going to​ challenge hens teeth!
• the​ Government hasn't even announced the​ rules under which a​ first time buyer can qualify to​ even apply for a​ Homebuy mortgage .​
• the​ scheme is​ not planned to​ be operational until October 2018 .​
So even if​ you're happy to​ pay the​ 1% premium,​ your chances don't look too good for qualifying for an​ Open Market Homebuy mortgage .​
Our advice is​ to​ forget about them and find a​ top class mortgage broker to​ seek out a​ great deal on​ the​ open market .​
Signs that our reticence is​ shared amongst Members of​ Parliament came from a​ comment from Michael Grove,​ shadow housing minister .​
He is​ reported as​ telling the​ Sunday Telegraph that he wanted to​ see the​ Homebuy scheme made easier and cheaper for lenders in​ order to​ encourage greater participation from the​ mortgage providers .​
We think that's fine,​ but participate in​ what? Until we know who can apply and how much they can borrow,​ the​ scheme means nothing.

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