FIRST-TIME buyers will be given a helping hand onto the property ladder thanks to a million pound commitment from Wigan Council.
Town hall chiefs are putting £1 million into a mortgage indemnity scheme run by high street bank Lloyds TSB.
It allows people buying their first home to get a mortgage on more affordable lending rates. It’s hoped the scheme will help 40 buyers in Wigan Borough get the keys to their first home.
The Local Lend a Hand scheme, which will be available in all Lloyds TSB branches in the area, has already helped hundreds of people across the country secure their first property. It allows home-buyers with a deposit of five per cent to borrow at rates normally reserved for borrowers with a 25 per cent deposit.
The buyer still owns the property but benefits from having access to a lower rate of interest than would normally be available to someone with their level of deposit. Wigan Council will underwrite up to 20 per cent of the loan.
First-time buyers often say that raising a deposit is the biggest challenge they face when looking to enter the housing market. The scheme means borrowers don’t need to come up with the ten per cent deposit required by most mortgage lenders.
The scheme is designed to help people like Danielle Roberts Wareing who has been hoping to buy her first home for three years.
The 27-year old social worker from Wigan has struggled to get a mortgage with the deposit she has saved. She says: “I got a quote for a mortgage but couldn’t get enough money together for the deposit they wanted. It was frustrating because I work full-time but couldn’t save the money they were asking for.
“It’s not easy getting a ten per cent deposit together when you still have all your other out-goings. I’m renting at the moment but would really love to buy my first home. I sort of feel my life is on hold until I can do it.
"It is fantastic Wigan Council is doing something like this because it will really help people in my situation.”
Lloyds TSB worked with Sector Treasury Services, part of the Capita Group, to develop the Local Lend a Hand product. It’s already been used in places like Warrington and Blackpool. Cllr Chris Ready, Wigan Council cabinet member for housing, says: “This is great news for all those people who are desperate to get their first house but are trapped out of the market by the high deposits demanded by mortgage providers.
“Wigan Council has wanted to help first-time buyers for some time. I’m delighted we will be in a position to support many of them through this scheme. A million pounds is a lot of money, particularly in the current economic climate for local councils, but that just demonstrates how serious we are about this.
"We cannot sit by and watch as people are shut out of the housing market and prevented from buying their own home.”
Subject to Lloyds TSB's usual lending criteria, borrowers are able to buy property in Wigan Borough with a loan of up to £123,500. Buyers will have to put down a minimum five per cent of the property price and Wigan Council will provide a cash backed indemnity of up to 20 per cent as additional security. The council will then earn interest on this amount.
Stephen Noakes, mortgages director at Lloyds TSB, says: “With the launch of Local Lend a Hand in Wigan 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 property 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 problems prospective buyers in Wigan might face."
Cecilie Booth, Director at Sector Treasury Services, says: “Many potential first-time buyers in Wigan, including those on the council’s housing register 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 pay-outs 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.”
The scheme is available in Wigan Borough from today (Thursday, January 10). Anyone interested in the scheme should visit their local branch of Lloyds TSB for more information.