Designed to help first-time buyers and public sector workers onto the property ladder, the shared equity means applicants can buy a home with no deposit and with a mortgage of 75 per cent of the property value.
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With an average sale price of £16,000 based on a loan of £120,000, the monthly interest payment will be £665.
There are three parts to an Open Market HomeBuy mortgage. The initial mortgage is 75 per cent of the property price, a 12.5 per cent charge free equity loan from the lender and a further 12.5 per cent charge free equity loan from the government. The equity loan from the lender is charge-free for the first five years, after which a small interest charge will be made. The government equity loan is charge-free for the full term of the mortgage.
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When a property bought through Open Market HomeBuy is sold, the equity loans are repaid and both the lender and the government are entitled to a 12.5 per cent share of the increase in the property value.
Andy Caton, corporate development director at Yorkshire, said: “Open Market HomeBuy is very close to our building society origins of helping people into home ownership. We are therefore delighted to be one of the main providers of this initiative which is helping key workers get on the property ladder in areas where house prices have spiralled out reach.”
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Mike Staight, director at Mustard Commercial Finance, welcomed the move by Yorkshire BS. He said: “If the support is there, there’s no reason why HomeBuy won’t take off.”
