A council-backed scheme to help people in Blaby district onto the housing ladder has been given a boost after councillors agreed to invest a further £1 million to guarantee deposits for first-time buyers.
The Local Lend a Hand scheme – launched by Lloyds TSB and Blaby District Council in October last year – allows prospective homeowners to purchase a property with a deposit of just 5 per cent as the Council will guarantee up to a further 20 per cent of the mortgage value with the lender.
More than 30 first-time buyers have already been successful in securing a mortgage through the scheme and many now have the keys to their first home.
The initial £1 million invested into Lloyds TSB to guarantee the deposits has nearly all been allocated and councillors consider the scheme so successful they have agreed to invest again.
Councillor John Hudson, finance and efficiency portfolio holder said:
“The scheme has been a great success and made a real difference to many people’s lives so we are happy to pledge further support for the initiative which will allow even more first-time buyers to get that all important first foot on the housing ladder.
“We are giving people the chance to own their own home whilst giving a boost to the local housing market and relieving demand for social housing at the same time.”
Blaby was the first district council in the country to make the scheme available.
Toby Cann, 25, and Amy Desbrow, 27, were celebrating after becoming the first people to buy a property through the scheme. They picked up the keys to their new home in Leicester Forest East in January and moved in one month later. Toby said:
“We were both still living at our parent’s houses and had been saving a deposit for around 18 months but we didn’t think we had enough cash put away until we heard about this scheme.
“Almost straight away we booked an appointment at Lloyds TSB and things moved really quickly from there.
“When we found out we had got the house I was so excited and relieved as it looked at one point like someone had outbid us at the last minute.”
The couple needed a deposit of roughly £6,250 (5 per cent) for their property – which was priced at £124,950 – and the Council guaranteed a further £24,990 (20 per cent).
The Council’s money will only be needed if the borrower fails to make repayments or breaches the terms of the mortgage and the property was repossessed and subsequently sold at a loss.
The first-time buyer owns the property in its entirety and will have access to a range of products at a lower rate of interest than would normally be available for this level of deposit.
Stephen Noakes, commercial director for mortgages, at Lloyds TSB said:
“The Local Lend a Hand scheme in Blaby is making the housing market more accessible to more people. We know that many young people turn to the bank of mum and dad to get their foot on the ladder, but that solution is not open to everyone.
“Helping people to buy their first home is crucial in achieving and maintaining a sustainable housing market. This scheme addresses some of the real problems that prospective buyers in Blaby district might face.”
Anyone interested in the Local Lend a Hand scheme should visit their local branch of Lloyds TSB for more information.
How Local Lend a Hand works
· Each local authority will agree where in their area the scheme will be available.
· Subject to usual lending criteria, first time buyers will then be able to view properties within that area and choose their new home.
· Local Lend a Hand is for loans between £25,000 and £350,000, but the maximum loan size will be dependent on the local authority.
· The first time buyer will put down at least 5 per cent of the value of the property, and get the Local Lend a Hand mortgage for the remaining amount.
· The local authority will provide a cash backed indemnity of up to 20 per cent of the property value as additional security. Interest will be earned on this amount.
· The first time buyer will own the property in its entirety (unlike shared ownership schemes).
· The fixed rate mortgage products that will be available for first time buyers during this scheme will be at a lower rate of interest than would normally be available for this level of deposit, helping them with the cost of their monthly payments.