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Worcester City Council to invest £1 million in mortgage scheme for first-time buyers

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Worcester City Council to invest £1 million in mortgage scheme for first-time buyers

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Published by Jon Land for 24dash.com in Housing and also in Local Government

Worcester City Council to invest £1 million in mortgage scheme for first-time buyers Worcester City Council to invest £1 million in mortgage scheme for first-time buyers

Councillors in Worcester are to debate plans to set aside an initial £1 million to help first time buyers.

Under the proposed Local Authority Mortgage Scheme (LAMS), would-be homeowners would only be required to hand over a deposit worth just 5% of the value of the property they want to purchase.

Mortgage lending across the country is currently down by approximately 6% compared to last year. The proposed scheme aims to help residents who are struggling to raise the 20-25% deposit that banks routinely require to get on the housing ladder, although they could afford the monthly mortgage repayments. The city council would indemnify the bank or building society for the further 20% of the value for five years.

Banks would still apply their normal lending criteria, to ensure that borrowers could afford repayments.

“By helping more people to buy their first home, we can get some movement in the housing market in Worcester and free up rental properties and social housing for those that most need them,” said Worcester City Council leader Simon Geraghty.

Similar initiatives have been successful in other parts of the country, with no defaults so far recorded on over 1,000 mortgages currently administered nationally under the Local Authority Mortgage Scheme.

Worcester City Council estimates that the £1 million it proposes to set aside would help 30 to 40 individuals or families get a foot on the housing ladder in 2013.

Councillors will vote on whether to adopt the Local Authority Mortgage Scheme at the full council meeting on 27 November.

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