The government launched its Open Market HomeBuy scheme (OMHB) in October 2006, with the aim of helping first-time buyers to buy homes. It was particularly aimed at key workers such as teachers, nurses, fire fighters, police officers, assisting them to get a mortgage. It is a system of shared equity, allowing applicants to buy the home they would like without any deposit and a mortgage for only 75% of the value of the property. The rest is made up of two loans: the first is from the mortgage lender, and the second is from the government. These come with decent terms. The loan from the lender has no charges for the first five years, and then a small interest charge is applied. The government’s share is without charge for the full period of the mortgage.
Yorkshire Building Society (YBS) has said that it will put over £100m towards properties bought via the OMHB scheme. Other lenders in the scheme are Nationwide Building Society, HBOS and Advantage mortgages. YBS say that the average price for an OMHB property is £160,000, and mortgage payments are therefore paid on three quarters of that: £120,000. They offer a five-year fixed rate of 6.65% on this, making the monthly payment £798. The 100% loan-to-value mortgage repayments would be £1,064.
YBS has lent more than £100m so far to around 700 buyers, making an average loan of around £140,000. The other lenders have not issued any figures. The government has a target of helping 6,500 buyers a year buy their first home.
YBS are pleased with their contribution to the key workers in society, saying that it fits well with their origins of assisting people to buy homes. Without this kind of help key workers would be left out of sight of homes in many areas. Innovative mortgage solutions are always needed to help first-time buyers get on the property ladder.
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