Plans to extend the Government's shared-equity scheme for homebuyers should enable an additional 20,000 people to get on to the property ladder before 2010, mortgage lenders said last night.
Three lenders - HBOS, Nationwide Building Society and Yorkshire Building Society - are to launch a two-year pilot scheme offering shared-ownership loans to struggling borrowers.
Under the current Open Market Homebuy scheme, borrowers can apply for a standard 75 per cent mortgage on a property from a conventional lender, with a further 25 per cent loan from the Government. This second chunk of borrowing is interest-free but the Government is then entitled to 25 per cent of the proceeds, including any property market gains, when the property is eventually sold.
Yesterday, the Chancellor said the mortgage industry had agreed to double the reach of the scheme by splitting the cost of the equity-only loans with the Government. The three lenders will provide half of the 25 per cent interest-free loans, on the condition that the Government takes the first hit if house prices fall.
Nationwide's executive director, Stuart Bernau, said: "It's in everyone's interest that first time buyers are able to get a foot on the housing ladder."
The scheme is aimed at public sector key workers, social housing tenants and people on the housing register. Local housing boards also have powers to set their own eligibility criteria.Reuse content