Overview and Scrutiny to consider Council joining new scheme to
help first time buyers
A new scheme that could help first time buyers get onto the
housing ladder is being considered by Wyre Forest District
Council's Overview and Scrutiny Committee on Thursday
1st December. It is designed for people who can
afford mortgage repayments but do not have a large deposit.
This Scheme is already running in 6 local authorities with a
further 5 about launch it very soon. The initiative,
called the Local Authority Mortgage Scheme was created by the
Sector Treasury Services, part of the Capita Group. It
involves local authorities 'topping up' the deposits of working
people, to bridge the gap between the cost of a typical 75% and 95%
loan to value mortgage offered by banks and other lenders.
The key elements of the scheme are that participating local
authorities will provide financial assistance to fund up to 20 per
cent of a first time buyers mortgage. This is by lodging the
funds with the lender for the first 5 years. Participating
local authorities will only incur actual costs if a loss is
incurred by the mortgage lender further down the line. The
banks and building societies will still apply their normal lending
criteria to ensure that borrowers can afford repayments; and the
total funds available in each local authority area will be capped
by the authority, both in total and per mortgage.
Lloyds TSB were the first high street bank to join the scheme
through an extension of its 'lend a hand' initiative. There is now
a growing number of lenders to offer mortgages under the
initiative.
The recommendation from the Treasury Review panel is that
Council formally considers the Local Authority Mortgage
Scheme. If Overview and Scrutiny endorse the scheme it will
go forward for consideration by the Cabinet. A final decision
would be made by full Council in the New Year.
This scheme complements the new government backed mortgage
indemnity scheme launched on Monday 21st November.
This supports mortgages on new properties and requires
developers to guarantee the 20% deposit.
Read
the Overview and Scrutiny Meeting agenda. The meeting,
which is open to the public, will take place in the Earl
Baldwin Suite, Duke House, Clensmore Street, Kidderminster at
6pm.
Date of issue - 23rd November 2011