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Home sweet home step nearer reality for first-time buyers in Worcester
FIRST-time buyers will get a leg up on the housing ladder thanks to a new partnership.
Lloyds TSB and Worcester City Council yesterday joined forces to help first-time buyers purchase a home with a deposit of just five per cent.
The Lend a Hand product was available in local branches of Lloyds TSB from yesterday.
Worcester City Council has set aside £1 million, which should help 30 to 40 buyers on to the property ladder.
According to Lloyds TSB statistics, every first-time buyer purchasing a home and starting out in the housing market creates a knock-on effect, with another four home moves taking place as other home owners move up the ladder.
These house moves benefit Worcester’s economy in a number of ways – not only for estate agents and solicitors, but also removal companies, carpet suppliers, DIY and furniture stores and even greetings card shops.
First-time buyers often say that raising a deposit is the biggest challenge they face. 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 Lend a Hand product. The scheme enables borrowers to buy their home with a deposit below the normal 10 to 25 per cent range.
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. Simon Geraghty, leader of Worcester City Council, said: “This scheme is aimed at helping those potential first-time buyers in Worcester.”
Stephen Noakes, mortgages director at Lloyds TSB, said: “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.”
Subject to Lloyds TSB's usual lending criteria, borrowers are able to select any existing property in the area covered by Worcester City Council up to a maximum loan of £171,500. First-time buyers will put down a minimum five per cent of the property price, and Worcester City Council will provide a cash backed indemnity of up to 20 per cent 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.