Lloyds TSB has unveiled a mortgage product which allows first-time buyers to purchase a home with a deposit of 5 per cent alongside support from a number of local authorities.
Under the scheme the buyer puts down at least 5 per cent of the value of the property and uses the Lend a Hand mortgage for the remaining amount. The local authority then provides a cash backed indemnity of up to 20 per cent of the property value as additional security and will earn interest on this amount.
Local authorities will agree where in their area the scheme will be available. Subject to lending criteria being met, the bank will then offer first-time buyers loans of between £25,000 and £350,000. The maximum loan size will be dependent on the local authority.
Lloyds TSB head of mortgages Carol Anderson says: “By developing Local Lend a Hand and working with local authorities across the UK, we’re broadening the prospect of home ownership to even more first-time buyers.”
The bank is currently working with local authorities including East Lothian, Blackpool, Warrington Newcastle under Lyme on the initiative, although it plans to establish the scheme across the UK this year.