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    FIRST STEPS Equity Loans – FirstBuy

    FirstBuy gives you the opportunity to buy a new home with the help of an equity loan of up to 20% of the full purchase price. The FirstBuy equity loan will be interest free for the first five years with a charge payable from year six.

    FirstBuy is available on homes in designated developments across London and are funded by the developer and by the government.

    To buy with FirstBuy you will need savings (a minimum of a 5% deposit on the share you are buying) and a mortgage to meet a minimum of 80% of the value of the home you want to buy. The rest of the purchase price of the home will be paid for by FirstBuy.

    For the first five years of FirstBuy home ownership you will not have to pay any fees. Then after five years, you will pay a fee to the National HomeBuy Agent of 1.75% per annum on the outstanding loan. This fee will increase each year by RPI (Retail Price Index – the general measure of inflation) plus 1%.

    After 12 months of ownership you can also choose to make part repayments (‘staircasing’) on your FirstBuy equity loan at the current market value at the time you wish to staircase. The minimum additional repayment is 10% of the total market value.

    When you sell your home, you will repay FirstBuy from the appropriate share of the sale proceeds. For example, if your FirstBuy equity loan was originally for 20% of the full market value of your home and you had not staircased at any point; you would repay 20% of the full market value when it came to selling. Who is eligible for FirstBuy?

    To qualify, you must meet the following criteria:

    Your household income is less than £64,300 pa for applications for 1 & 2 bed properties and up to £77,200 pa for applications for family sized properties (3+ bedrooms).

    You are a first-time buyer, or a homeowner who needs to move because of a change in your family’s circumstances (in which case you must sell your existing property).

    Priority will be given to:

    Social tenants – council and housing association tenants

    Serving Armed Forces personnel

    Other locally defined priority groups and first time buyers

    What next?  

    Search for a property   HomeBuy DirectWith HomeBuy Direct, you can buy a newly built home on a designated selected development with the help of an equity loan. Your mortgage, savings and any deposit required must fund a minimum of 70% of the total purchase price; the remainder will be paid for with an equity loan of up to 30% of the total purchase price. For the first five years of home ownership there is no fee charged on the equity loan, from the start of year six a fee of 1.75% is payable on the equity loan – this will be based on the market value of the property at the time of buying and the outstanding percentage of equity loan to be repaid. The fee on the equity loan rises at year six at a rate of RPI (Retail Price Index) plus 1%.

    HomeBuy Direct is a past product, but there are still a handful of HomeBuy Direct developments which will be made available in London this year. Eligibility and priority terms are the same as those for FirstBuy.

    If you have already bought a home with HomeBuy Direct and are looking to move, repay your loan, or remortgage, visit www.myfirsthome.org.uk who can help and advise you on these after sales transactions and more.

    “FIRST STEPS to ownership in London” portal 8.3.13