An innovative scheme to help first time buyers onto the property ladder has been launched by Lloyds TSB and fifteen local councils.
Authorities including Warrington, East Lothian and Blackpool
have agreed to put money into the bank’s Local Lend a Hand scheme to top-up the deposits of first time buyers looking to buy homes in their area.
Finding the deposit is the biggest hurdle facing first time buyers
Since the credit crunch, many lenders have required that first time buyers provide a deposit of
between 20 and 25 per cent of the purchase price. Whilst some lenders have relaxed this over
recent months, only two – Yorkshire Bank and Skipton Building Society, via its estate agency
subsidiary Connells – will lend up to 95 per cent.
Stephen Noakes, commercial director of mortgages at Lloyds TSB, said: “Helping people to buy their
first home is crucial in achieving and maintaining a sustainable housing market. With Local Lend
a Hand we are taking our existing Lend a Hand product to another level and addressing the real
challenges first-time buyers face.”
Local Lend a Hand designed to help first time buyers
The scheme means that buyers will have to pay interest on the full amount borrowed (including the
amount lent to them by the local authority) but will benefit from slightly lower interest rates than
they would normally pay for a 90 per cent loan. Loans under the scheme cost 5.09 per cent with a
£895 fee or 5.79 per cent with no fee fixed for three years, compared to the ‘normal’ rate of 5.99 per
cent fixed for three years with a £895 fee.
Lloyds TSB are willing to lend from £25,000 to £350,000 per property although local councils can set
their own maximum limit based on property prices in their area.
The first time buyer buyer must put down a deposit of at least 5 per cent and the local authority will
provide a cash-backed indemnity of up to 20 per cent. Unlike a shared ownership scheme, the buyer
will own the whole property.
