Essex: Mortgage help for first-time buyers will come a year ahead of national scheme promised by Chancellor

Help for new home buyers

Help for new home buyers - Credit: Archant

SQUEEZED first-time house buyers in Essex are to get help to get on the property ladder months before a planned nationwide scheme announced in this week’s Budget.

Essex County Council is set to launch a Local Authority Mortgage Scheme (LAMS) in April to help people get a mortgage.

The scheme is being run in conjunction with district and borough councils to provide a financial guarantee for up to 20% of a mortgage loan.

Under the terms of the scheme, which will be administered by participating high street banks, district councils will be expected to match the level of funds being guaranteed by the county council. The interest rate payable will be in line with the mortgage product being offered by the mortgage lender at the time.

Currently, both Colchester Borough Council and Braintree District Council in north Essex are expected to sign up to the agreement.

On Wednesday, Chancellor George Osborne outlined his plans to help home buyers and to stimulate the property market. He announced £3.5billion for a help-to-buy scheme which will see the Government offer an interest free loan worth 20% of a new build house. He also said the Government would offer mortgage guarantees to lenders, so that they can feel secure in offering mortgages to people with only small deposits to put down. Both these initiatives are expected to be launched in 2014.

But deputy leader of Essex County Council, David Finch, said there is no intention of waiting to find out more details about the Government’s plans before launching the local scheme.

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He said: “Our scheme is ready to go as of April 1st. I think it is important we continue as we have planned, so we can help first time buyers in Essex as soon as possible.

“There are few details about the Government’s plans at the moment and we might be able to dovetail into their scheme in due course. I will have to see the detail but I would expect there would be some kind of tapering off, so our scheme would slow down and we would direct people to the government scheme.”

Mr Finch said the amount Essex County Council would be prepared to guarantee would be £2million in total. The council estimates the scheme could help around 6,000 people in the county.

At Colchester Borough Council, portfolio holder for housing, Tina Bourne, said the council was currently investigating how much it could commit to the scheme. She also said there would be checks in place to ensure people don’t take advantage of both the Essex scheme and the Government’s proposed funding.

She added: “The Essex scheme is a good idea for people who earn enough to make mortgage repayments but never get the chance to build up a deposit because all their money goes on rent.

“I think we would set a ceiling on the amount we would guarantee. I think a reasonable price of a property that a first-time buyer can expect to aim for is around £140,000.”

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