Lloyds TSB is teaming up with four local councils to help prospective first-time buyers.

The ‘Local Lend a Hand’ scheme means first-time buyers can buy a home with just a 5% deposit.

Lloyds TSB has worked with Sector Treasury Services, part of the Capita Group, to develop the product, which is part of a range which already includes products that allow first-time buyers and homemovers with a smaller deposit to buy a home with the support of a ‘helper’ – usually parents or other family and friends.

With the new initiative, Local Lend a Hand, Lloyds TSB is inviting local authorities to take the role of ‘helper’. Lloyds TSB is currently working with Sector Treasury Services to pilot the scheme with local authorities including Blackpool, Warrington, Newcastle under Lyme and East Lothian, with a view to fully establish the scheme across the UK throughout 2011.

Local Lend a Hand is for loans between £25,000 and £350,000, but the maximum loan size will be dependent on the local authority.

Each local authority will agree where in their area the scheme will be available. Subject to usual lending criteria, first time buyers will then be able to view properties within that area and choose their new home.

The first time buyer will put down at least 5% of the value of the property, and get the &lta href=&quothttp://www.lloydstsb.com/mortgages/lend_a_hand.asp&quot&gtLocal Lend a Hand mortgage&lt/a&gt for the remaining amount. The local authority will provide a cash backed indemnity of up to 20% of the property value as additional security. Interest will be earned on this amount.

The first time buyer will own the property in its entirety (unlike shared ownership schemes). The fixed rate mortgage products that will be available for first time buyers during this scheme will be at a lower rate of interest than would normally be available for this level of deposit, helping them with the cost of their monthly payments.

Stephen Noakes, commercial director, mortgages, said: “We know that a lot of young people turn to the ‘Bank of Mum and Dad’ to get their foot on the ladder