Better Business
Blog: So long, Homebuy Direct – what comes next?
With the contraction in governemnt funding to Homebuy Direct last month, housebuilders will need to be looking to fill the gap.
This Government-backed scheme provides finance to help thousands of homebuyers buy a new-build home that otherwise would have been beyond their reach, by offering equity share of up to 25%.
But equity share schemes are not the sole preserve of the Government and housebuilders need to act fast if they want to retain market share in the current market. By offering homebuyers a way to get onto or move up the housing ladder, builders can help protect their business from the lack of confidence in the housing market and convince buyers that with interest rates low, now really is a good time to buy their own home.
Several of the largest housebuilders – including Barratt and Bloor Homes have schemes in place already and they have been joined by other significant players such as CALA and Horgan Homes.
Many mortgage lenders are willing to finance the arrangements – NatWest and Nationwide are two lenders active in this market. Loans of up to 75% are available and with competitive interest rates too, there’s not a great price difference from ‘ordinary’ mortgage schemes. Some lenders will even accept a deposit provided by the builder, though most will also require the borrower to contribute at least 5% themselves.
What’s more, the equity share schemes are not limited to just first time buyers, but can also be used by those who need to trade up to a bigger property, perhaps to accommodate a growing family, or to move to another area of the country for their work. In short, equity share schemes are injecting flexibility into the housing market – not just for those they were designed to help, but also providing an influx of buyers so that in future years, there will be people already on the property ladder, ready to trade up. Builders who want to protect their business against the current vagaries of the property market should consider equity share and other options to encourage borrowers to choose their property developments above others – after all, some of their competitors are already offering such incentives.
Your First Home: confidence to build
Sponsored by Halifax Intermediaries
Charles Haresnape, Group Mortgage Services Director, Connells