Lend a Hand Mortgages

publication date: Apr 1, 2011
 | 
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books
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Lend a Hand Mortgages


15 local authorities and Lloyds TSB  launch a fund to top up the deposits of local first-time buyers to allow them to buy a home for as little as 5%.

According to Lloyds “The Lend a Hand product range already includes products that allow first time buyers and home movers with a smaller deposit to buy a home with the support of a 'helper' - usually parents or other family and friends.”

The difference with this initiative is “Lloyds TSB invites local authorities to take the role of 'helper'". Initially each local authority agrees the area where the scheme is made available. Subject to (no doubt ‘normal’ lending criteria) first time buyers (FTBs) can view properties in the chosen area and decide which home they want. They are then lent between £25,000 and £350,000, with the maximum loan size dependent on the local authority.

The first time buyer has to find at least 5% deposit and via the Local Lend a Hand Mortgage the remaining deposit amount is raised. Unlike shared home schemes, the FTB will own the property outright, subject to the usual loan rules and regulations. The local authority will have a cash backed indemnity of up to 20% of the property’s value so no money is lost.

Areas that are likely to come on board for the pilot of this new scheme include:-

  • Blackpool
  • Warrington
  • Newcastle under Lyme
  • East Lothian


Kate Faulkner, MD of Designs on Property is stunned at this offer for First Time Buyers. “Firstly, tax payers money shouldn’t really be used in this way, it should be to help build more affordable homes in the first place, not subsidise people buying a home.”

In Kate’s view “This is an insignificant short term fix for a major long term problem and will have little or no effect at all.” Kate goes on to say “These types of policies are being made up by people who have no, or little understanding of the housing market and are applying the wrong fixes to a major problem in an effort to be ‘seeing to do something’. The fact remains prices are going up because people are competing too much for too few properties, until we sort this problem out, prices will ultimately continue to rise.”

Kate concludes “The more property prices rise, the richer the property owner ‘class’ get and the more the non property owning public will be priced out of the market”.
 
For more information visit the Lloyds TSB website

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