HomeBuy Direct
What is HomeBuy Direct?
HomeBuy Direct is an equity loan scheme available on specific new build properties brought forward by developers. Buyers are offered an equity loan of up to 30 per cent of the purchase price, co-funded by Government and the developer.
The scheme will also help participating house builders by enabling more first time buyers to purchase their newly built properties.
How does it work?
HomeBuy Direct operates as follows:
- As with the other HomeBuy products, the 15 regional HomeBuy Agents (external link) will be the first point of contact for First-Time Buyers who are interested in applying for the scheme
- General eligibility for HomeBuy Direct will be the same as for the other HomeBuy products (ie households earning £60,000 or less who could not afford to buy a suitable property on the open market without assistance in the area where they want to live)
- Applicants will also be subject to an affordability check, designed to assess the size of equity share that they are able to afford and sustain
- If applicants qualify for the scheme, they will be invited to choose one of the HomeBuy Direct properties brought forward by the developers
- The purchaser will receive an equity loan of up to 30 per cent of the purchase price of the chosen property. The equity loan will be co-funded on equal terms by Government and by the developer supplying the property. The purchaser must contribute the remaining equity (a minimum of 70 per cent), through their mortgage (which could be obtained from any lender regulated by the Financial Services Authority) and any deposit.
- There will be no fee charge for the equity loan for the first five years but a fee will be charged from year six onwards.
- Purchasers can redeem the equity loan in installments, purchasing up to 100 per cent equity after their initial purchase by buying additional equity at the market rate
- Buyers will be able to sell their HomeBuy Direct home on the open market. When they do so, they will repay the equity loan by way of a share of the sale proceeds. This repayment will be shared equally between Government and the developer.
- If the value of the property has increased by the point of sale, the buyer, the developer and Government will all share in this increase. If the value of the property has gone down, Government and the developer will only share the sale proceeds that are left over once the mortgage has been repaid.
Who is eligible?
General eligibility for the scheme is the same as for our other HomeBuy schemes (ie households earning £60,000 or less who could not afford to buy a suitable property on the open market without assistance).
Although the scheme is targeted at First-Time Buyers, HomeBuy Direct could also help people who have previously owned properties but are now unable to buy without assistance, for example in the case of relationship breakdowns or families who are over-crowded in their existing homes.
A complete list of HomeBuy Agents and their contact details is available on the Homes and Communities Agency website (external link).
Direct contact 0303 444 0000
