First-time buyers in Mansfield will soon find it easier to put a foot on the housing ladder as a new mortgage scheme is launched by Mansfield District Council and the Mansfield Building Society.
The scheme, which will be piloted for a year, could enable tenants in private rented accommodation to purchase their first home in the district.
It enables people to buy a home in the district for between £130,000 and £170,000 with the assistance of a mortgage from Mansfield Building Society that requires a 2.5 per cent deposit. This is because the council will act as a guarantor for the other 2.5 per cent deposit.
Normally the best home loan Mansfield Building Society is able to offer is a 95 per cent mortgage but finding a 5 per cent deposit can prove difficult for many would-be buyers.
With the council indemnifying 2.5 per cent of the mortgage, Mansfield Building Society has been able to increase the amount of the loan to 97.5 per cent of the value of a home.
This means that, for example, on a £150,000 home, first-time buyers in Mansfield now need to find a deposit of £3,750 instead of £7,500 needed to access a minimum 5 per cent deposit mortgage.
Buyers will also be able to apply for an interest-free loan from the council, once the purchase has been completed, to help with new home expenses.
Kate Allsop, Mayor, said: "This new mortgage scheme will be a fantastic boost for both first-time buyers and for the local housing market as a whole.
"Saving for a large deposit has been a massive barrier for many people in taking that first step in home ownership. This scheme will help those people who are falling short of the deposit they need.
"The council's interest-free loan will help buyers over another hurdle in purchasing a home - the cost of moving."
Gev Lynott, Chief Executive of Mansfield Building Society, said the scheme would give a real boost to local people who might otherwise struggle to get on the housing ladder, specifically those on the "rental treadmill".
He said: “The Low Deposit Mortgage Lending Scheme enables people to escape the downsides of paying away a monthly rental cost that can often be higher than the equivalent monthly mortgage cost.
"By launching this product with Mansfield District Council, we will help more people to become homeowners in good quality housing.
"Not only can applicants access a mortgage with a deposit of just 2.5 per cent, they will also benefit from The Mansfield's personal service; we recognise that everyone is different, and we therefore apply an individualised, common sense lending approach.
"We are delighted to be demonstrating our continued commitment to local people in our heartland area.”
The scheme does not see the council paying anything towards the cost of people buying a home. However, if a borrower does not keep up with their mortgage payments and Mansfield Building Society has to repossess the property, the council would have to pay to the society 2.5 per cent of the total loan.
In addition to acting as a guarantor, the council is also offering an interest-free loan for new home expenses. This loan of up to 1.5 per cent of the property purchase price will be repayable over six years. It can be used for new home expenses such as new furniture, white goods and curtains.
It is hoped that the scheme will encourage more people to become home owners in the area and create movement in the local housing market. It is expected to help around 16 first-time buyers during the pilot period.
If successful and further council funding is available, the scheme could be rolled out to more mortgage providers in the future.
Terms and conditions apply to the scheme including:
- Buyers must take a mortgage out with Mansfield Building Society.
- Homes bought must be within the district.
- The scheme cannot be used by tenants exercising their right to buy a council or housing association home.
- Buyers must be currently in the private rented sector.
Anyone interested in the scheme should approach Mansfield Building Society for more details on 01623 900047 or see mansfieldbs.co.uk.