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Housing minister Mark Prisk launches scheme
A £12 million county council-funded project to help home buyers on to the Hertfordshire property ladder has been launched by housing minister Mark Prisk.
The new scheme will help more than 500 people buy homes in the county, by offering them a mortgage in return of a deposit of just five per cent.
Robert Gordon, leader of Hertfordshire County Council launched the programme on Friday, alongside Mr Prisk, the minister of state for housing and local growth.
The Conservative MP said: "We want councils to help first-time buyers and support their local housing market and economy.
"The Local Authority Mortgage Scheme, which enables aspiring homeowners to get on the first rung of the housing ladder is just the type of innovative approach we want to see other councils adopting."
The scheme is aimed at first-time buyers who would have been eligible for a 95 per cent mortgage before the recession.
Since the banking crisis, the maximum that lenders were prepared to give those customers is 75 per cent mortgages, meaning the prospective buyers of a £200,000 property would now have to find £50,000 upfront.
The idea of the scheme is to close the gap by councils guaranteeing the difference between the 75 per cent and 95 per cent deposit, meaning those who were eligible for the cheaper deposit before the recession can still obtain one.
Hertfordshire County Council has set aside £12million for the scheme.
Robert Gordon, leader of the county council, said: "First-time buyers often say that raising a deposit is the biggest challenge they face when looking to take their first steps onto the property ladder.
"Hertfordshire is a great place to live but its attractiveness and location mean that it can be difficult for people to buy their first home.
"This scheme provides an opportunity for the county council to help first-time buyers, assist the local housing market and relieve some local demand for social housing."
The new Local Authority Mortgage Scheme will be available in local branches of Lloyds TSB and the Leeds Building Society.
However, In the event of repossession, any shortfall will have to be met by the local authority.