FIRST time buyers in Argyll and Bute have been offered a helping hand on to the property ladder by Argyll and Bute Council, which has agreed to adopt a Local Authority Mortgage Scheme.
Councillors approved the scheme, which will provide assistance to potential buyers who can afford mortgage payments but are struggling to find an initial deposit on a new home, at a meeting this week.
The authority will provide up to £3 million to fund the scheme over three years – an annual indemnity of £1 million.
As with other lending schemes, people will have to be able to afford their payments and meet certain lending criteria.
If approved for a loan, they will be able to borrow between 75 and 95 per cent of the purchase price, with the council providing a top-up indemnity for five years.
This means that people can effectively access the equivalent of a 95 per cent mortgage on the same terms as a 75 per cent loan without the need for a substantial deposit which is frequently out of reach.
In Argyll and Bute there will be a maximum loan value of £150,000.
For example, on a property costing £150,000, there would be a five per cent deposit of £7,500 from the buyer and a 95 per cent mortgage of £142,500. The council would provide an indemnity of £30,000.
The scheme could assist up to 33 home buyers across Argyll and Bute each year.
Argyll and Bute Council’s Lead Councillor for Housing, George Freeman, said: “As the economic situation becomes increasingly tough, so people find it more and more difficult to step onto the property ladder and buy their own home.
“The Local Authority Mortgage Scheme which we are adopting will help to ease this situation and will open up the possibility of home ownership for people all over the area.
“It will also help to stimulate the local economy and bring more life to our communities if people are able to afford to live and work in Argyll and Bute.”
The scheme will be open to qualifying post codes in the boundaries of Argyll and Bute Council, and borrowers will have to be able to afford payments and meet criteria set by both the lender and the council.