Five councils have come up with a plan to help struggling first time buyers get their first foot on the property ladder.
The plan, which involves topping up the buyers deposits is aimed at those who could afford the monthly mortgage repayments, but don’t have enough money saved for a deposit.
The councils will team up with Lloyds TSB and put 20% of the price into the house, and the lender will ask for a further five percent from the buyer.
The councils money will then remain their own, but they do risk losing it all if the buyer defaults on their mortgage.
The mortgage rates will subsequently be lower as more money has been put down in the first place and the council benefit by receiving a good interest rate on the money they have put down.
The scheme will be available to up to 300 first time buyers in each of the five councils, but with 10 others looking at joining, potentially thousands more could end up benefitting.
The scheme will be called ‘Local Lend a Hand’ and Stephen Noakes of helping bank, Lloyds TSB said, “We know that a lot of young people turn to the Bank of Mum and Dad to get their foot on the ladder, but that’s not a solution for everyone.”
“By developing Local Lend a Hand and working with local authorities across the UK, we’re broadening the prospect of home ownership to even more first-time buyers.
“Helping people to buy their first home is crucial in achieving and maintaining a sustainable housing market,” he added.
The five councils ready to launch are Warrington, Northumberland, East Lothian, Blackpool and Newcastle-under-Lyme.