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Home Buy Scheme
The Home Buy Scheme is a government backed scheme aimed at getting people on to the property ladder that would not normally be able to do so in the current climate.
There are several schemes, some in respect of second hand properties but the most popular ones relate to new build properties and is operated by a large number of national builders.
The buyer has to meet the criteria of the scheme (these vary slightly from scheme to scheme) and if they qualify they can purchase a new home and only provide 70% of the purchase price, either by mortgage or a combination of cash and mortgage, the balance of the 30% purchase price is paid by the government scheme and the builder (15% each).
The buyers owns the whole of the property, the 30% being secured by way of two equity mortgages, basically there are three mortgages on the property, the first in favour of the main lender (which must be a recognised main stream lender), the second and third in favour of the government scheme and the builder. The equity mortgages are interest free for the first five years, after that you will pay a small fee on the loans (currently 1.75% and rising annually by the Retail Price Index plus 1%). The buyer can also start to pay off some of the equity mortgages after 12 months.
All loans are paid off when the property is sold.