The Local Authority Purchase and Renovation Loan will be split into two parts, a fixed rate mortgage and a variable rate bridging loan, both of which will have different interest rates and repayment terms. The variable rate bridging loan is an interest only loan and will be equal to the Vacant Property Refurbishment Grant amount that you have been approved for. This variable rate bridging loan must be repaid once the Vacant Property Refurbishment Grant is paid out.
For the fixed rate annuity loan the Local Authority Purchase and Renovation Loan offers two fixed interest rate products:
4.00% fixed for up to 25 years (APR 4.07%)*
4.05% fixed for loans over 25 years and up to 30 years (APR 4.13%)*
* Rates are subject to change. Mortgage rates are set on the date of drawdown of your loan.
With a fixed interest rate product your monthly repayments remain the same for the full fixed rate loan period, making budgeting easier - but during the fixed rate period, you may be liable for a breakage fee if you pay off all or part of your mortgage early.
All fixed rates are exclusive of Mortgage Protection Insurance (MPI) which is a requirement of borrowing. Eligible borrowers are required to partake in the local authority collective MPI scheme. MPI is payable monthly, in addition to loan repayments.
What is an interest only variable rate loan?
Variable rate loans are loans for which the interest rate can rise or fall. For the bridging loan element of the Local Authority Purchase and Renovation Loan you will only be required to make repayments that cover the interest on the loan, you will not be making any payments off the loan itself each month.
The full amount of the loan will be repaid by you when you receive the Vacant Property Refurbishment Grant (VPRG). However you can pay off earlier if you wish for no charge.
For the variable rate bridging loan the LAPR offers this at:
3.5% interest only variable rate for 2 years (APR 3.56%).