Councils to help first-time buyers
Lloyds TSB is teaming up with local councils to help first-time buyers get a foot on the property ladder.
In a scheme being trialed by five councils, the lender will offer more competitive mortgage rates to first-time buyers when councils deposit 20% of the property value in one of its savings accounts. The buyer then only has to stump up 5% deposit.
The council will be liable if the buyer defaults but it will receive a good rate on its savings, says the bank, although the exact details of what they will earn are yet to be confirmed.
The Local Lend a Hand mortgage is an extension of the Lend a Hand product already offered by the bank in which parents provide the 20% in savings.
The councils trialing the scheme are Warrington, Northumberland, East Lothian, Blackpool and Newcastle-under-Lyme.
According to reports, another 10 councils are waiting to join the scheme.
Stephen Noakes, commercial director of mortgages at Lloyds TSB, says: "We know that a lot of 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.
"By developing Local Lend a Hand and working with local authorities across the UK, we're broadening the prospect of home ownership to even more first-time buyers."
Noakes says helping people to buy their first home is crucial in achieving and maintaining a sustainable housing market.
He adds: "With Local Lend a Hand, we're taking our existing Lend a Hand product to another level and addressing the real challenges first-time buyers face."