Fresh hope for first-timers after revamp of loan aid

The government has relaunched a low-cost shared-ownership product that could save struggling first-time buyers hundreds of pounds a month.

With the new Open Market HomeBuy scheme, the government is attempting to address problems with its previous programme of the same name, which had a poor take-up. It was launched without warning or fanfare last week, buried in the small print of the housing green paper, and caught both brokers and mortgage lenders on the hop.

Under the new version of the scheme the government will provide an interest-free loan worth up to 17.5 per cent of the value of a property a first-time buyer would like to buy, with the purchaser taking out a mortgage on the rest. The government will lend up to £50,000 on each property, which means eligible first-time buyers will be able to look at properties worth up to £286,000. The maximum household income, joint or single, of eligible applicants is £60,000.

Crucially, the mortgage can now be any type of loan with any lender and will not be limited to a select few expensive products, as with the old version of Open Market HomeBuy.

'This opens up the doors to a lot more people and lenders can be more generous with their lending criteria,' says Richard Stone, director of SPF Sherwins, a mortgage broker specialising in mortgages for affordable housing schemes.

Source: http://society.guardian.co.uk/communities/news/0,,2137747,00.html