The Local Authority Home Loan is a Government backed mortgage scheme for those who cannot get sufficient funding from commercial banks to purchase or build a home. It has been available nationwide from local authorities since 4 January 2022 for first-time buyers and fresh start applicants. The loan can be used both for new and second-hand properties, or to self-build.
The Local Authority Home Loan offers two fixed interest rate products:
3.35% fixed for up to 25 years (APR 3.40%)
3.45% fixed for loans over 25 years and up to 30 years (APR 3.51%)
Loans issued under the Local Authority Home Loan must be on a prudential basis so as to protect the financial interests of both borrowers and local authorities as lenders. The interest rate set for loans under the Local Authority Home Loan is based on the rate applicable at the time of drawdown of the loan.
An approval of an application for the Local Authority Home Loan does not mandate a borrower to execute the loan on the basis of an Approval in Principle or a letter of loan offer, that may not proceed. Local authorities only drawdown funds from the Housing Finance Agency when a borrower proceeds with their loan drawdown as this is when the lending contract is executed. Therefore, it is the rate applicable at drawdown that is applied to the loan.