FIRST time buyers in Wigan could be given a boost under new proposals.
Wigan Council has set out terms of a new scheme which aims to give first time buyers a chance to get a foot on the property ladder which they may not otherwise be able to do because of the usual requirement for substantial deposits.
As part of the proposals, known as the Local Authority Mortgage Scheme (LAMS) the council would offer a top up indemnity of up to 20 per cent against a property.
That means that the buyer would only have to find a five per cent deposit rather than 25 per cent which has been required since the crash of the housing market.
A report to the committee said: “The scheme is aimed at first time buyers, providing help for potential buyers who can afford mortgage repayments - but not the initial deposit - to get on the property ladder.
“This is a key part of the scheme and not a return to providing mortgages to those who cannot sustain them.”
The national scheme has already been adopted by eight other authorities nationally and another 50 are in the process of introducing it, including a number of AGMA authorities.
Later this week cabinet members of the Economy, Environment, Culture and Housing Scrutiny Committee will vote on whether to go forward with the plans.
It is estimated that the council would be able to guarantee 100 mortgages in the first two years of the scheme based on a property value of £100,000.
In September 2011 Cabinet agreed that officers should carry on their work in developing the scheme, as it would alleviate the ongoing concern over the ability or mortgage resources, boost the stagnant housing market and reduce pressures on socially and private rented housing.
There is concern, however, about the risk this could cause to the council in already finally difficult times.
But the report states that the risk would be relatively low.
It said: “The main financial risk to the council in offering mortgage guarantees under the scheme is the risk of default by the borrowers.
“Should a default occur the council will be liable to fund any balance outstanding to the lender should the proceeds from the sale of the property not cover the outstanding mortgage balance.”
It added: “The current rate of mortgage possession orders in Wigan is 0.4 per cent, rates have fallen significantly 2008 and are now similar to the levels of the early 2000s.
“We will further limit out liability by limiting the value of each indemnity.
“Given this we consider the risk of liability to the council low.”