FIRST-TIME buyers in Liverpool are within weeks of being able to apply to the City Council for bridging loans to help get them on the property ladder.

The council is putting the finishing touches to a scheme which will allow new owners to top-up the amount they are able to borrow from traditional mortgage lenders.

This should bring a first property within reach for hundreds more buyers in the city, injecting new life into the city’s wider property market by helping to kick-start the bottom end.

Last night, deputy council leader Flo Clucas said: “By doing this, we will be helping our communities across the city. It enables the housing market to continue to grow by adding first-time buyers into the market.

“By keeping the market circ- ulating, we do not believe that we will be encouraging specu- lation or pushing prices up.”

The Labour opposition said it was broadly in favour of the scheme, but that it would need to be closely monitored to reduce the risk of the council losing money.

The idea is intended to offer first-time buyers help to raise the full deposit needed for a mortgage.

“We have checked and we are legally able to do this,” said Cllr Clucas.

“We have been talking to a national provider, but I am not at liberty to say who. We will be talking to a couple of others.”

She said it had initially just been planned to offer the loans to people seeking to buy in Housing Market Renewal Initiative areas, but it would now be extended to take in the entire city.

Cllr Clucas said that, if the buyer needed to raise a £20,000 deposit, but only had £5,000, the £15,000 difference would be offered in the form of an equity loan.

It would be re-payable when the home-owner sold the house or could be re-paid in a similar fashion to a mortgage, said Cllr Clucas.

Cllr Clucas first started investigating the idea in July, in response to the tightening of lending by mortgage companies, which has led to a major slowdown in property sales.

From June to December, 2007, the number of residential property sales in the “L postcode” area fell by 25%, and it is believed this decrease has continued apace since then.

She said she hoped council officials would compile a report for the city’s executive board next month for approval.

The scheme should be up and running by the end of the year, or the beginning of 2009, she added. Discussions are currently under way with the North West Development Agency and the Housing Corporation about funding.

The council is also looking into whether it should borrow money to assist the scheme.

She said the indications were that “several hundred” people a year could be helped through the initiative.

Labour deputy leader Cllr Paul Brant said: “We welcome prudent assistance for first- time buyers in the current market conditions; however, the devil will be in the detail of this scheme.

“The council must not expose itself to financial risks which could end up with council tax payers footing the bill for defaults if property prices continue to fall.

“The recent US sub-prime lending scandal proves that only those who can afford to repay the loans should be allowed to enter into large mortgages.”