East Lothian Council has agreed to note the substantial progress being made on creating a scheme, in partnership with the banking sector, to assist first-time home buyers across the county.
The proposed scheme is one new initiative to provide more affordable housing in East Lothian and discussions with a major UK high street bank are well advanced. The main aim of the scheme is to tackle the difficulty many first time buyers have in funding the deposit of around 25% often required when trying to purchase their first home.
East Lothian Council is seeking to provide a guarantee for up to 20% of the purchase price enabling the buyer to borrow up to 95% of the value of the property. The interest charged will be more favourable than would normally be available to borrowers with small deposits.
Cabinet Member for Housing and Community Safety, Cllr Stuart Currie, said:
“We are extremely hopeful that this scheme will be up and running in East Lothian in the near future. The effects of the financial crisis of 2008 continue to have a negative impact on the housing sector, particularly those seeking to purchase their first home.
"The amount of deposit required by most mortgage lenders means that many people cannot afford to take their first step on the home ownership ladder and so additional pressures are placed on social housing.
"This innovative scheme will provide an opportunity for potential first time buyers to secure funding for their deposit and eventual purchase of a property.”
The proposed scheme involves the council making a cash investment with the bank to back up the agreed overall value of the guarantee.
"This means that there will be an overall cap on the amount of borrowing made in East Lothian under this scheme and the number of borrowers that will be able to access it. The council can determine the maximum loan value and therefore can influence who will be most likely to benefit from the scheme.
Cllr Currie added:
“We know that the current demand for affordable housing in East Lothian greatly exceeds availability. This scheme enables the council to provide an additional choice for individuals, couples and families seeking their own home at an affordable cost.
"I am sure when the scheme is finalised and launched it will generate tremendous interest.”
