£1m loan scheme will help first-time buyers

A £1million scheme will give first-time buyers in Glasgow a helping hand to join the housing market.

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First-time buyers are to get help from the city council to raise cash for their home
First-time buyers are to get help from the city council to raise cash for their home

It will mean house hunters will no longer have to find the 25% deposits being demanded by some lenders. Instead, they will pay a deposit of only 5% and Glasgow City Council will underwrite up to 20% of loans up to £125,000.

That will allow buyers to obtain a 95% mortgage on similar terms to a 75% mortgage but without the huge deposit.

The city council is to become the first local authority in Scotland to join the scheme, which is aimed at boosting the flagging housing market.

Council leader Gordon Matheson said: "We want to help first-time buyers but also support Glasgow's housing market and local economy.

"For many people in our city, getting their feet on to the property ladder is only a dream when faced with trying to save a massive deposit before they can get access to an affordable mortgage. If people can't get on to the property ladder it will lead to major implications for our housing new-build programmes and the progress of planned city regeneration projects. That is why this scheme is a great fit for our city and our first-time buyers.

"In the first phase, we hope to help around 40 Glaswegians build themselves a future in a house they can make a home."

The council will lodge £1million with Lloyds Banking for five years, generating annual interest of around £40,000.

To qualify for a mortgage under the new scheme it is envisaged first-time buyers will get a maximum loan of £125,000, their new homes will have to be in the Glasgow city boundary and it will be their main residence.

Banks and buildings societies will continue to check potential buyers can afford repayments.

A report to go before councillors next week says the scheme is needed to boost housing in the city. It says: "Average property prices and the shortage of available credit for first-time buyers is one of the biggest problems currently facing the housing market.

"As a result, new-build starts have collapsed to their lowest level since the previous two recessions.

"Easing entry to the market for first-time purchasers is the key given most house sales have a chain leading back to a first-time buyer."

The scheme already runs in 33 local authorities south of the Border. Further information will be announced next year.

vivienne.nicoll@eveningtimes.co.uk

Finance

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