FIRST-TIME buyers are being thrown a lifeline following the council signing up to a pioneering new scheme to help them get on the property ladder.
The Local Authority Mortgage scheme, launched by Sector Treasury Services and backed by Lloyds TSB, will see local authorities ‘topping up’ the deposits of first-time buyers.
Hastings Borough Council has put up £1m funding and become the first in the south east to pilot the scheme which will be open to up to around 50 people.
Councils in Warrington and Blackpool were the first to go live.
The scheme was approved at a cabinet meeting last month and discussed at full council on October 19.
Under the terms of the scheme, the council will fund up to 20 per cent of a first-time buyer’s mortgage, by lodging the funds with the lender.
The authority will only incur costs if a loss is incurred by the mortgage lender further down the line.
Lloyds TSB will be the first high street bank to join the scheme, with Sector hoping the scheme will eventually comprise a panel of lenders.
The maximum loan value will be set at £150,000 and the council has agreed to commission Eversheds Solicitors to provide an acceptable opinion letter as required by the lender.
Under the scheme, banks and building societies will still apply their normal lending criteria to ensure that borrowers can afford repayments.
At the meeting councillor Simon Corrello was concerned that some of the banks involved in the scheme had been downgraded from their triple AAA rating.
But council leader Jeremey Birch stated: “I am all in favour of people getting a home for their family.
“Everyone of us is in favour of the scheme - nobody is against it. What are the safeguards?
“The mortgage lender does the checks. Lloyds will check the lenders are using the same criteria as everybody else. The same people who advise us about our own mortgages are the ones who designed this scheme.
“We will become the first council in the south east who has got the guts to do this and I fully support it.”