First-time buyers in Potters Bar will be given a helping hand on to the property ladder with a new scheme launched by Hertfordshire housing minister Mark Prisk.
The £12million county council-funded project will help more than 500 people buy homes in the county, by offering them a mortgage with a deposit of just five per cent.
Mr Prisk launched the Local Authority Mortgage Scheme on Friday, along with leader of Hertfordshire County Council Robert Gordon.
He said: “We want to help first-time buyers and support their local housing market and the economy.
“The scheme enables aspiring homeowners to get on the first rung of the housing ladder, and is just the type of innovative approach we want to see other councils adopting.”
Under the scheme, borrowers will be able to buy their first home with a deposit less than the ten per cent required by most mortgage lenders and with a lower rate of interest.
People who would have been eligible for a 95 per cent mortgage before the recession will be entitled to apply to take part in the scheme.
Since the banking crisis, the most lenders were prepared to give those customers is mortgages at 75 per cent – so the prospective buyers of a £200,000 property would now have to pay £50,000 upfront.
The idea of the first-come-first served scheme is to close the gap, with councils guaranteeing the difference between the 75 per cent and 95 per cent deposit.
Robert Gordon, leader of Hertfordshire County Council, said: “First-time buyers often say that raising a deposit is the biggest challenge they face when looking to get on the property ladder.
“This scheme provides an opportunity for the county council to help first-time buyers, assist the local housing market and relieve some local demand for social housing.”
The new Local Authority Mortgage Scheme will be available in local branches of Lloyds TSB and the Leeds Building Society.