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New scheme to help first time buyers

[Tuesday 2 October 2012]

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A new scheme that will help first time buyers to secure a mortgage could be available in the new year.

Members of North Devon Council's Executive today (Tuesday 2 October) approved plans for a Local Authority Mortgage Scheme (LAMS) with Lloyds TSB, to help people buy their first home.

The council would invest an initial £1 million into the scheme to enable first time buyers to obtain a mortgage with just a 5% deposit, whilst receiving a good interest rate. This would save the buyer having to find an average £40,000 for a 25% deposit on a £158,000 house.

The council's money would be kept in a separate account by the lender as a form of insurance - it is not given to the first time buyer.

Executive Member for Housing, Councillor Faye Webber, says: "It is really difficult for first time buyers to save for a healthy deposit to secure an affordable mortgage. As a result, many are forced to stay in social or private rented housing.

"By helping those who can afford monthly mortgage payments but not the average 15 to 25% deposit, we are freeing up social housing for the more vulnerable, whilst stimulating the local housing market and helping first time buyers onto the property ladder."

The scheme has already been successfully launched by 29 other local authorities, with records showing to date that no-one has defaulted on their mortgage repayments.

If proven successful here, the Executive would then look to invest a further £1 million into the scheme at a later date.

The planned scheme will now go to a full council meeting for final approval at the end of November. Further details of the initiative will then be released.

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