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Council funds more help for first-time buyers to tune of £3 million
Release date: Fri, 01/03/2013
Mayor George Ferguson and Bristol City Council cabinet have approved proposals to more than double the funding for a successful council-backed scheme aimed at helping Bristolians buy their first home.
A total of 38 people have been helped so far to secure their first home under the Local Authority Mortgage Scheme (LAMS) since its launch just over a year ago.
The scheme, which sees the city council join forces with a lender, helps potential first-time buyers, who are able to afford mortgage payments, but not the deposits of 25 per cent or more that are now often demanded by most lenders.
Bristol City Council invested £1 million in an initial scheme with Lloyds TSB, and continued the scheme with Leeds Building Society. Under the new proposals, a further £3 million will be made available by the local authority for an extension of the scheme with lenders to be decided. The proposals were agreed at a meeting of the Cabinet in Southmead yesterday (February 28).
George Ferguson said: “Helping deliver more affordable homes for first-time buyers is of vital importance. The Local Mortgage Housing Scheme is an excellent and practical way we can give first-time buyers a helping hand, at the same time as giving a boost to the city’s housing market.”
Councillor Guy Poultney, Cabinet Member for Homes, Regeneration and Planning, said: “The success of the council’s empty homes initiative, which is set to bring back around 600 empty private homes back into use in the current financial year, has attracted quite a lot of attention, locally and nationally.
“Since its launch two years ago, the Local Mortgage Scheme has helped people on a more modest scale, but it has demonstrated the potential to help many more.”
“It does not take taxpayers money from any other services and by helping people buy their first homes it potentially saves us money in housing support while relieving the burden on our social housing waiting-lists. Successful borrowers also benefit from lower interest rates making their mortgage payments more affordable.”
Under the LAMS, the council uses money from reserves that would normally be held in a standard deposit account to guarantee an additional portion of a borrower's mortgage deposit.
The extra interest provides a higher rate of return for the taxpayer than the council's normal deposit scheme and that additional income is used to offset any liability.
All mortgage applicants are vetted and approved by the lender to ensure that the loans only go to those first-time buyers who can afford to make the repayments.