HomeBuy Direct

HomeBuy Direct is a new shared equity scheme co-funded by the Housing & Communities Agency (HCA) and the Housebuilder. The scheme is designed to help people who wouldn’t otherwise be able, to get onto the property ladder. It is aimed at First Time Buyers and for those returning to the market as a result of relationship breakdown or families who are overcrowded in their existing home. Social tenants and key workers will be given priority.

Click here if you are a HomeBuy Direct Agent.

Click here if you are a HomeBuy Direct Housebuilder.

Click here to download the HomeBuy Direct Buyers' Guide.

The scheme is a replacement for the English Partnership First Time Buyers Initiative that has been running for a couple of years now and has had its final funding allocated.

The aim is to fund 18,000 new build purchases in 2009 with latest dates for completion March 2010.

The funding for the scheme is site and plot specific, these have already been allocated and housebuilders notified.

The customer must purchase between 70% to 85% of the value of the property. The remaining funds are made up by an equity loan divided equally between the HCA and the housebuilder.

Both parts of the equity loan have equal standing as a second charge. This means should the property go into negative equity, the drop is split equally between the HCA and the housebuilder.

The customer will be able to sell their home on the open market. When they do, they will repay the equity loan by way of a share of the sale proceeds. This repayment will be shared equally between the HCA and housebuilder.

The customer will pay an interest charge of 1.75% on the equity loan. This is not payable for the first 5 years and then increases annually by RPI +1%.

The equity loan has a life of 25 years.

The customer can staircase to increase their share. The minimum they can staircase is 10%. They are not allowed to staircase in the first 12 months of owning the property. If the mortgage is paid off within the 25 year term of its life, the equity loan becomes instantly redeemable.

The maximum income for a household must not exceed £60,000 per annum.

Affordability is based on a debt-to-income ratio basis. The monthly costs must not exceed 45% of net monthly income.