Council launches 'affordable mortgages' scheme
Published on 2nd October 2012
Council chiefs in Sandwell have launched a new 'affordable mortgages' scheme in a bid to help first-time buyers get a foot on the housing ladder.
The scheme is also aimed at getting the housing market going and increasing house building in the borough.
First-time buyers can now apply for up to 95% mortgages on new build homes in Sandwell.
The council's finance boss Councillor Steve Eling said the scheme, which launched yesterday (Monday 1 October) would offer sensible, affordable mortgages through a self-funding scheme.
Councillor Eling has allocated £2 million to set up the scheme, with the council holding properties as security so taxpayers' money is not at risk.
He said: "Young first-time buyers in Sandwell are struggling to get a foot on the housing ladder and we want to help them.
"We think it's very important for people to have the chance to buy their own home - and it's good for the economy and housing market too."
Councillor Eling, the council's deputy leader and cabinet member for strategic resources, said the council would require home buyers to put down a deposit of at least five per cent of the house value.
Banks, building societies and other providers have put in place many more restrictions on mortgages since the banking crisis, and deposits can be up to 40 per cent.
Councillor Eling added: "The mortgages we plan to offer will be sensible and affordable, not the type of reckless mortgages that some of banks and building societies used to offer.
"This scheme will also help people who are looking to buy new homes that we know are being built in Sandwell and encourage new house building too by giving developers increased confidence."
Councils have powers to lend money to people to buy homes under the Housing Act 1985.
The criteria for Sandwell Council's mortgages is as follows:
Loans will be available up to 95% loan-to-value, subject to appropriate affordability requirements and valuation.
- Properties will be new-build and located within the Sandwell Council geographic area.
- The loan will be up to four times the annual salary for a single applicant or two and a half times for a joint application. Applicants will need to demonstrate that they are creditworthy and have sufficient income to repay the loan.
- Properties will have the benefit of an appropriate new homes warranty scheme.
- There will be a maximum mortgage term of 25 years.
- Properties upon which loans are granted will be for owner-occupation only.
- An arrangement fee of £400 is payable to the council for each mortgage application to cover the council's own legal fees, money transfer charges, etc. Applicants will meet their own legal and valuation costs.