FIRST-TIME buyers dreaming of owning their own home are to be given a boost onto the property ladder with help from South Kesteven District Council.
The authority will launch the scheme today, becoming the first council in the county to adopt the new Local Authority Mortgage Scheme after setting aside £5 million to help people buy their first home.
The scheme will mean the deposit needed by first-time buyers is cut from 20 per cent to just five per cent, with the council guaranteeing the difference.
Council leader Linda Neal said: “We know that lots of people can afford monthly mortgage payments but cannot move into the market because they haven’t got a deposit.”
Without the scheme, someone looking to purchase a £100,000 home would need a deposit of £20,000.
Coun Neal explains: “Not too many people starting out in the housing market have got that sort of cash and that is where we can help.”
The council scheme will mean the deposit needed on a £100,000 house will fall from £20,000 to £5,000.
The scheme will be available to any first-time buyers in the district, providing the home they are buying is also within the district. It will only be available to people looking to purchase a house worth a maximum of £125,000.
The council believes the scheme will provide a boost to the whole housing market, as well as free up some of its own stock of council houses.
Coun Neal said: “National statistics show that when a first time purchaser buys an existing property this can prompt another five movements in a chain, so this scheme will be a real stimulus to the whole of the housing market.
“We also know that there are lots of people in council accommodation who would like to move into the private sector, but can’t because they haven’t got the deposit.
“This scheme will help to make their dreams come true and release properties to people on our waiting list.”
The £5 million will come out of the council’s reserves and be used to guarantee the 15 per cent difference.
The money will be used if the borrower fails to make repayments or breaches the terms of the mortgage and the property is sold at a loss.
However, Coun Neal believes the scheme is low risk with the potential for high reward.
Coun Neal said: “I want to make it clear that this scheme does not promote reckless lending or unaffordable mortgages.
“What it will do is make dreams come true for first-time buyers who will be able to get a home of their own and so provide a much-needed stimulus to the entire local housing market.”
Before the scheme is adopted it must first be given the green-light by the cabinet and a meeting of the full council in March of next year.
If passed, the first £1 million commitment will be part of the council’s 2012/13 budget in the new financial year.