Those that are struggling to get on that first step on the housing ladder in Coventry might have helping hand, in the form of the Coventry Council.
There are talks that the council will provide a kind of mortgage ‘top-up’ to first-time buyers who are struggling to save the deposit required, meaning they can finally get on that first yet hard to reach step.
In order for this to work a partner bank or building society will have to lend 75 per cent of the mortgage, and the council lending 20 per cent. Successful applicants only then have to raise a 5 per cent deposit lessening the burden.
Coventry Building Society appears to be the favourite in terms of the lending bank/building society as the majority of talks have been involved with them.
What seems to be stopping this help from taking place is the matter of high risk, as those who are successful will be those that have not been able to obtain a mortgage from any high street bank. Search for properties in Coventry now!
Chris West, the council’s director of finance and legal services, presented the plan to councilors at the Transport and Infrastructure Development Scrutiny Committee last week. He said: “The first advice I would give you is risk.
“You will not find many financial advisers who would recommend getting into the mortgage market right now. It is probably not in the range of normal for local authorities these days.
“The other thing is we would have to put a lot of money in for not many mortgages. Then we would need to get into the debate whether we would want to do this for all homes or just new homes.
“My view is to just offer council mortgages willy nilly would not achieve much. We need to use it to stimulate housing development.”
The idea is in its early stages and, if implemented, would be carefully targeted, possibly according to postcode and economic circumstances. Any council mortgage would be in partnership with a high-street provider and lent at a commercial rate to cover its costs.
Around eight per cent of mortgages would be expected to default. Unlike other councils which provide similar mortgages, funding for it would be borrowed.
If councilors decide to provide the mortgages, the policy will take six months to implement.
Source: Coventry Telegraph