Hastings Borough Council has joined forces with Lloyds TSB to help first time buyers purchase a home with a deposit of just 5%. The Local Lend a Hand product started in local branches of Lloyds TSB on 10 January 2012.
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.
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 The scheme enables borrowers to buy their first home with a deposit less than the 10% required by most mortgage lenders.
Hastings Borough Council is the first local authority in the South of England to make the Local Lend a Hand scheme available. Further launches are planned across the UK helping people achieve home ownership.
Council leader Jeremy Birch said:
"We are very proud to be able to offer those members of our community who would not normally have the opportunity to own their own home without this initiative. We are hoping to be able to help up to 50 local residents to become home owners."
Stephen Noakes, commercial director, mortgages added:
"With the launch of Local Lend a Hand in Hastings, 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's 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 Hastings might face."
Cecilie Booth, Director at Sector Treasury Services, said:
"Many potential first-time buyers in Hastings including those on the 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. Local authorities will both free up social housing for the more 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 benefitting the wider local economy."
Subject to Lloyds TSB's usual lending criteria, borrowers are able to select a property within the local area, up to a maximum loan size of £150,000. First time buyers will put down 5% of the property price, and Hastings Borough Council will provide a cash backed indemnity of up to 20% as additional security. The local authority 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.
In the event of repossession and subsequent shortfall sale LTSB will call on the local authority funds to make up the shortfall.
Visit www.lloydstsb.com for further information.
