Lloyds TSB and Cardiff Council have joined forces to help first time buyers purchase a home with a deposit of just 5%. The Local Lend a Hand product will be available in local branches of Lloyds TSB from 27 April 2012.
First time buyers often say that raising a deposit is the biggest challenge they face when looking to take their first steps onto the property ladder.
Responding to calls for further innovation in the first time buyer market, Lloyds TSB worked with Sector Treasury Services, part of the Capita Group, to develop the Local Lend a Hand product. The scheme enables borrowers to buy their first home with a deposit less than the 25% required by most mortgage lenders. The fixed rate mortgage products that will be available during this scheme will also be at a lower rate of interest than would normally be available for this level of deposit.
Cardiff Council’s Chief Officer for Communities, Sarah McGill: “I am delighted we are able to offer the Local Lend a Hand scheme which will provide a huge help for first time buyers in Cardiff and will kick start the housing market and boost the local economy.
“Cardiff is the first Local Authority in South Wales to be able to offer this product, which has already been introduced by a number of local authorities in the UK, initial pilot schemes are now flourishing and have helped many first time buyers get onto the property market, I am positive the Cardiff Scheme will prove just as successful.”
Stephen Noakes, commercial director, mortgages comments, “With the launch of Local Lend a Hand in Cardiff, 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 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 real problems that prospective buyers in Cardiff might face.”
Cecilie Booth, Director at Sector Treasury Services, said: “Many potential first-time buyers in Cardiff, including those on the council’s housing waiting list, 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 payouts 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. “
Subject to Lloyds TSB’s usual lending criteria, borrowers are able to select any property within the local area (excluding new build properties), up to a maximum loan size of £133,000. First time buyers will put down 5% of the property price, and Cardiff Council will provide a cash backed indemnity of up to 20% as additional security. The local authority then earns interest on this amount.
The first time buyer owns the property in its entirety, and will have access to a range of products at a lower rate of interest than would normally be available for this level of deposit.
Those interested in the Cardiff scheme should visit their local branch of Lloyds TSB for more information.
