Cannock Chase Council's £2m pledge to first-time buyers
Struggling first-time buyers in Cannock will be helped onto the property ladder by the Cannock Chase Council – which will top up their deposits under new plans.
The authority has ringfenced £2 million to help buyers who are unable to afford the large deposits required by most lenders concerned about borrowers defaulting on their loans.
Cannock Chase Council has joined with Lloyds TSB to help 70 people in the district.
The council will put 20 per cent of the asking price in the bank's account, with the lender asking for a five per cent deposit. Most mortgage lenders require a 10 to 15 per cent deposit.
The bank still arranges a 95 per cent mortgage but with the extra security provided by the council, the interest rate will be lower than buyers would normally pay with a smaller deposit.
The scheme has been given the go-ahead by the council cabinet and is waiting on approval by the full council. It is expected to be available in Cannock Chase by early summer. The council risks losing money if a buyer defaults but stands to benefit from a generous interest rate if all goes according to plan.
Under the scheme, if a couple bought a property for £120,000, they would need to provide a five per cent deposit of £6,000 and would be provided with £24,000 from the council. Together, this would provide the 25 per cent deposit required by lenders to secure a preferential rate on their mortgage. Housing leader Councillor Frank Allen said: "We're delighted to recommend the Local Lend a Hand scheme to full council for approval. Getting more people on to the housing ladder will also stimulate the local housing market and benefit the wider local economy."
Borrowers will be able to select any existing property in Cannock, Rugeley, Hednesford and surrounding villages up to a maximum loan of £135,000 – but it does not include new build homes.
