Fifteen local authorities team up with Lloyds TSB in a scheme to top-up first-time buyers’ deposits
First-time buyers who are unable to call on the bank of mum and dad to boost their deposit may now be able to turn to their local council instead.
Fifteen local authorities, including East Lothian, Blackpool, Newcastle-under-Lyme and Warrington, have agreed to put money in a Lloyds TSB scheme to top up the deposits of first-time buyers trying to buy a home in their area. The scheme, called Local Lend a Hand, allows first-timers to buy a home with a deposit of as little as 5%.
Raising a deposit is one of the biggest hurdles for first-time buyers since the 2007 banking crisis, with many lenders refusing mortgages to those whose savings are less than 20% of the value of the property they want to buy, and offering the lowest rates to those with deposits of 25% or more. The requirement for a big deposit has relaxed recently with more lenders willing to provide mortgages worth 90% of a property’s value, but only two – Yorkshire Bank and Skipton building society, via its estate agency subsidiary Connells – will lend up to 95%.