A scheme to help dozens of first-time buyers get on the property ladder through a £2m Derbyshire County Council investment will be launched tomorrow.
The county council has joined forces with Lloyds TSB for the Local Lend a Hand scheme in Derbyshire which will support at least 58 first-time buyers who might otherwise not get a mortgage.
First-time buyers meeting the scheme’s criteria will be eligible for a mortgage with a preferential interest rate if they can raise a five per cent deposit.
Councillor Andrew Lewer, leader of Derbyshire County Council, will be at the Matlock branch of Lloyds TSB tomorrow (Tuesday) at 10am to officially launch the scheme.
Following the launch customers can visit any Lloyds TSB branch to find out more about the Local Lend a Hand Scheme in Derbyshire.
Cllr Lewer said: “Buying your first home is an exciting time and we have already had a tremendous response from first-time buyers to our Derbyshire Lend a Hand scheme.
“High cost levels of existing 95 per cent mortgages can make it difficult for some people to get on the property ladder and our link-up with Lloyds TSB makes it affordable for more people to get started in their first home.
“It will also have a positive knock-on effect in the local economy. Every time a first time buyer enters the property market it sparks, on average, another four transactions further up the chain.”
The Local Lend a Hand scheme in Derbyshire only applies to existing homes – not new builds – to maximise the positive knock on effect it will have further up the chain.
Lloyds TSB will manage the scheme and borrowers will have to satisfy usual mortgage qualification requirements.
The maximum loan value is £142,500, meaning borrowers who are approved by Lloyds TSB credit checks could purchase a property up to the value of £150,000 with a five per cent deposit of £7,500 on properties with a qualifying postcode.
Stephen Noakes, mortgages director at Lloyds TSB, said: “With the launch of Local Lend a Hand in Derbyshire, we’re making the housing market more accessible to local people.
“We know that many young people turn to the bank of mum and dad to get their foot on the ladder, but that is not the solution for everyone.
“Helping people to buy their first home is crucial in achieving and maintaining a sustainable housing market.”
The county council’s investment means it will insure against default on its 20 per cent share of the loan in the first five years – effectively acting as guarantor.
If the borrower defaults, the house can be sold and the proceeds used to repay the mortgage and as much of the amount guaranteed by the council as possible.
Only 0.3 per cent of all mortgages defaulted in 2010, and the county council is confident that the scheme provides adequate safeguards against potential risk to public cash.
Only one Local Lend a Hand scheme with any single mortgage provider can operate in an area. £1.75m of the county council’s investment will cover a single scheme in the districts of Amber Valley, Bolsover, Derbyshire Dales, Erewash, NE Derbyshire, High Peak and South Derbyshire.
Chesterfield Borough Council is expected to launch a scheme in conjunction with Derbyshire County Council, covering just the Chesterfield area, at a later date and the authority has set aside £250,000 to support this.