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...
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