Nottinghamshire County Council has set aside £15m for the Local Lend a Hand scheme, which will be available in local branches of Lloyds TSB from today.
The scheme will help at least 500 first-time buyers to purchase their dream home with a deposit of just 5%.
First-time buyers often say that raising a deposit is the biggest challenge they face when looking to take their first steps onto the property ladder.
The scheme is open to first-time buyers purchasing a property worth up to £150,000. It enables borrowers to buy their first home with a deposit less than the 10% or greater, required by most mortgage lenders.
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The fixed rate mortgage products that will be available during this scheme will also be at a lower rate of interest than would normally be available for this level of deposit.The scheme aims to breathe new life into the county’s housing market and provide an economic boost for Nottinghamshire by benefiting a range of businesses which rely on a healthy housing market, from DIY shops and estate agents to furniture stores and plumbers.
Coun Reg Adair, Chairman of the Finance and Property Committee at Nottinghamshire County Council, said: “The County Council is delighted to be working with Lloyds TSB t launch such an exciting scheme, which will be such a huge help to people looking to get onto the housing ladder for the first time.
“The Local Lend a Hand scheme will make a dream home a reality for more than 500 individuals, couples or families. It’s good news for taxpayers too - not only is it a safe investment, it will stimulate home ownership and benefit numerous businesses that rely on a thriving housing market.
“We believe the level of funding we are proposing to put behind the scheme will make it the biggest of its type in the country and reflects the positive impact we believe it can have on both the lives of hundreds of Notts residents and the county’s economy.”
Responding to calls for further innovation in the first-time buyer market, Lloyds TSB worked with Sector Treasury Services, part of the Capita Group, to develop the Local Lend a Hand product.
Stephen Noakes, mortgages director at Lloyds TSB, commented: “With the launch of Local Lend a Hand in Nottinghamshire 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 is not a solution for everyone.
“Helping people to buy their first home is crucial in achieving and maintaining a sustainable housing market. Local Lend a Hand addresses some of the real problems that prospective buyers in Nottinghamshire might face.”
Cecilie Booth, Director at Sector Treasury Services, said: “Many potential first-time buyers in Nottinghamshire, including those on Council housing registers or currently occupying affordable or social housing, are unable to save a sufficient deposit, even though they could afford mortgage repayments on a typical first home. The initiative is designed to bridge that gap.
“Local authorities will both free-up social housing for the most vulnerable and reduce payouts to private landlords and expensive short-term accommodation. More people will be able to take the step of buying their first home, stimulating the local housing market and benefiting the wider economy.”
Subject to Lloyds TSB usual lending criteria, borrowers are able to select any existing property in the area covered by Nottinghamshire County Council up to a maximum loan of £142,500.
First-time buyers will put down a minimum 5% of the property price and Nottinghamshire County Council will provide a cash backed indemnity of up to 20% as additional security. The Council then earns interest on this amount.
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.
Those interested in the local scheme should visit their local branch of Lloyds TSB for more information. Information about the scheme is available at www.nottinghamshire.gov.uk/mortgages