MORTGAGE SCHEME OFFERS HELP TO FIRST-TIME BUYERS

Stockport Council has approved plans to help first-time buyers and give the housing market a boost with a new mortgage scheme.

On 2^nd April the Council’s Executive approved the plans for the ‘Local Authority Mortgage Scheme’ (LAMS) to assist first-time buyers to get onto the property ladder.

The Leader of Stockport Council, Councillor Sue Derbyshire, said: “This is a pioneering scheme which will give first-time buyers a helping hand onto the property ladder and give a significant boost to the housing market in Stockport.

“The Council will be providing £3million of support into this scheme, which we expect will assist over 100 first-time buyers to get onto the property ladder. This would create a chain effect which is likely to facilitate the sale of another 300-360 properties across the borough, boosting the local economy.”  

The Council has been considering ways to boost the housing market while helping first-time buyers. The LAMS scheme was developed by ‘Sector’, and has now been introduced by a wide range of local authorities, with an increasing number of lenders taking part.

The Government also recently announced that they are looking at introducing a similar scheme from 2014 onwards.

LAMS works through lenders who undertake the normal credit reference checks, but provide a 95% mortgage (5% deposit from the purchaser), based on lending rates they would normally offer on a 75% mortgage.

The 20% difference is ‘guaranteed’ by the Council for five years through a mortgage indemnity provided via a large scale deposit with the lender. The lender can only call down this indemnity if the property is repossessed and the subsequent sale does not realise the outstanding capital owed to the lender.

In return, the Council receives a preferential interest rate on the large scale deposit. And after the five years, the risk reverts wholly to the lender.

Key points for the mortgage scheme are as follows:

• Available for first-time buyers only
• Applicants will be assessed by participating lenders
• Properties must be within Stockport
• Maximum loan size will be £142,500
• Not available for ‘right to buy’,‘buy to let’ applicants or new build properties

Details of the lenders participating in the Stockport scheme and people who can apply will be publicised in the near future.