The Local Lend a Hand scheme, launched today (Tuesday October 18) in Blaby, Leicestershire, will enable first-time buyers to purchase a home with a deposit of just 5 per cent.
As part of the scheme the Council will help people who can afford mortgage repayments, but not a large deposit, to secure a house by guaranteeing up to 20 per cent of the total value of the mortgage taken out with Lloyds TSB.
First time buyers often claim that raising a deposit is the biggest challenge they face when looking to take their first steps onto the property ladder.
Lloyds TSB has worked with Sector Treasury Services (part of the Capita Group) to develop the product which enables borrowers to buy their first home with a deposit less than the 10 per cent required by many mortgage lenders.
The Council is the first district council in England to make this opportunity available to first-time buyers wishing to live in their district.
Council leader Ernie White said: “This scheme provides a relatively lowrisk opportunity for us to help first-time buyers onto thehousing ladder while assisting the local housing market and relieving local demand for social housing.”
Stephen Noakes, commercial director, mortgages said: “With the launch of Local Lend a Hand in Blaby we’re 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 might face.”
Sector Treasury Services ran pilots schemes with several local authorities earlier in 2011. Cecilie Booth, company director said: “Many potential first-time buyers in Blaby, including those on the Council’s housing waiting list, or currently occupying affordable or social housing units, are unable to save a sufficient deposit, even though they could afford mortgage repayments on a typical first home. This initiative is designed to bridge that gap. “
The Council’s guarantee would only be called upon if the borrower failed to make the repayments or breached the terms of the mortgage and the property was eventually 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.
Anyone interested in the Local Lend a Hand scheme should visit their local branch of Lloyds TSB for more information.