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Preface First

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Purchase Assistance Loans

The Purchase Assistance Loan can be used to fund the gap between the finance available to the applicant for the acquisition of the property (i.e. mortgage finance, savings) and the acquisition price of the property being acquired. The applicant must not be able to purchase the property without the use of the Loan, and must be able to demonstrate this to the Loan Administrator.

The applicant must be able to provide a minimum deposit of 5% of the value of the property being acquired. The property being acquired with the Loan must be:

i)             For owner-occupation by the applicant as their only or principal home

ii)            Located within the Cluster areas

iii)           Mortgageable

iv)           Not worth more than £180,000

v)            Either a new-build property or

vi)           An existing terraced property that has been renovated by the Council

Applications for the Loan must be made to the Council’s Property Advice Team, whose staff will assess the applications for basic eligibility and will provide initial advice to actual and potential applicants. The Council’s agent (a registered social landlord) will carry out the financial administration of the Loan.  The Council will secure the Loan as a secondary charge on the property acquired, behind any mortgage charge.

The maximum Loan available can be no more than 20% of the value of the property being acquired, up to a maximum cash limit of £30,000 and there are no repayments required during the life of the Purchase Assistance Loan. The repayment of the Purchase Assistance Loan will not arise until one or more of the following arises:

  • The death of the owner;
  • The owner leaves the property to live elsewhere and has no reasonable prospects of returning (e.g. moving into residential care);
  • The owner acquires another property which will be their main residence;
  • The owner sells the property;
  • The owner is found not to be using the property as their sole or main residence;
  • The owner repays and extinguishes the Loan;
  • Where a mortgage lender takes possession of the property under the terms of that mortgage contract

Calculating the amount to be repaid is based upon the share of the original purchase price that was funded by the Purchase Assistance Loan. For example, if a Purchase Assistance Loan of £30,000 is used to help the owner to acquire a property costing £150,000, the original share of the property that the Loan has bought is 20%. If the property value has risen to, say, £165,000 at the point that the Loan is repaid, then the amount that will need to be repaid will be £165,000 x 20% = £33,000. 

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