Housing help for key workers

2 October 2006

There’s extra financial help available for up to 20,000 key workers looking to get on the property ladder from today.  The “Open Market HomeBuy Scheme” will see the Government and some lenders funding up to 25% of the cost of a property.

It’s intended to help key workers afford more expensive properties; interest payments on the Government loan start after five years. Borrowers will still have to fund the remaining 75% of the property cost through a standard mortgage and/or their own savings.

So who can apply? The scheme is open to public sector workers and people on council housing waiting lists. Applicants will be assessed by HomeBuy agents, employed by local housing associations.

The scheme works like this: Once an applicant is accepted, they’ll have 12.5% of the property value loaned to them by the Government and 12.5% by a mortgage lender. This 25% loan will be interest-free for the first five years, but if the property is sold then the Government and the lender will be entitled to a share in any increase in its value.

The loan will help the borrower buy a more expensive property. Take the example of a public sector worker earning £35,000 a year. They’d be entitled to a mortgage of £122,500 – and with the HomeBuy scheme loan on top, they could afford a property worth £160,000.

The Housing minister, Yvette Cooper, said: “We want to help more families get a first step on to the housing ladder. In the long run we need to build more homes to ease the pressure on house prices. But in the meantime, this new mortgage deal will help thousands of families into a home of their own.”