Scheme will help first-time buyers secure a deposit

By Tim Clarke Thursday 29 November 2012 Updated: 29/11 10:44

UP TO 39 first-time buyers who are struggling to get on the property ladder are set to benefit from a new city council-backed mortgage scheme.

Councillors have agreed to set aside £1million to partner Lloyds TSB and help support house hunters who can afford mortgage repayments but are struggling to raise the 20 to 25 per cent deposit typically asked for by lenders.

Under the Local Authority Mortgage Scheme (LAMS) people buying their first home will only have to stump up a five per cent deposit with the council topping up the difference.

The council will then indemnify the bank for the remaining 20 per cent of the value for five years.

The plans were given the unanimous backing of full council on Tuesday (November 27) and the scheme should be up and running early next year.

Applicants will still be subject to the bank's strict lending rules and criteria set out by the council.

If it proves a success a further £1million could be set aside to help more first-time buyers in 2014/15.

But some councillors voiced concerns that people from outside Worcester could apply for support from the LAMS.

Coun Alan Amos (Lab/Warndon) said: "It seems to me fairly clear that given Worcester City is putting up the money for this, the city is taking the risks and the city will take any losses that the applicants should all be people who are full time residents of Worcester. It would be very difficult for me to vote for a scheme which, if we are not careful, would benefit everybody apart from the residents of this city."

Council leader Simon Geraghty (Cons/St Clement) said the rules of the scheme meant it could not be restricted to just Worcester residents. But he said in other parts of the country where it had already been rolled out by councils about 95 per cent of applicants tended to be from the local area.

"This is all about helping Worcester people to get on the property ladder. It will help people who can afford mortgage repayments but not a deposit," he added.

Labour's finance spokesman Coun Richard Boorn said it was a very commendable scheme and he could see very little risk in it for the council.

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