The product, available to all borrowers who are eligible under the scheme, will have a tracker rate priced at 1 per cent above Base Rate, which is currently 4.75 per cent. The product carries a reservation fee of £599 which can be paid upfront or added to the loan.
The details of the product are as follows:
Five-year tracker rate product available at: 5.75 per cent
Reservation fee: £599
Nationwide will provide the borrower with a 12.5 per cent equity loan which, combined with an equivalent loan from the government, will make up a 25 per cent deposit for each property purchased under the scheme. Under the Open Market HomeBuy scheme, purchasers only have to be able to afford a mortgage of 75 per cent of the property purchase price because no payments are made to either of the two equity loans for at least five years. This enables people to purchase properties that would otherwise be out of reach. For example, with a household income of £32,000 the borrowers could afford a mortgage of £136,000, and using this mortgage in conjunction with the two equity loans means their purchasing power would be boosted to £180,000.
Eligibility for the scheme is determined by government HomeBuy agents employed by local housing associations. Applicants have to meet with their local HomeBuy agent who will explain how the scheme works and assess their eligibility. Applicants are then encouraged to see an independent financial adviser who can provide advice on the mortgage options available.
Stuart Bernau, executive director at Nationwide, said: “When it comes to buying a property in today’s market, key workers and first time buyers need all the help they can get. This is a great opportunity for Nationwide, working together with the government, to make home ownership a reality for many. We are already a player in low cost home ownership, with a long-standing involvement in funding housing associations, who in turn help many people to buy properties on a shared ownership basis. The Open Market HomeBuy scheme is therefore a natural step for us and we are pleased we can help even more people get onto the housing ladder.”
