What is lift and how could it help me buy a home?

Publised date : 01 Jun 2019

The Low-cost Initiative for First Time buyers – or LIFT – was launched by The Scottish Government in 2007. It can help first-time buyers with low to moderate incomes to secure their own first home in Scotland.
If you are a UK citizen, or have right of residence in the UK, then there are three schemes under LIFT that could help you purchase a home – if you can provide a minimum 5% deposit.
Say the house you like is on the market for £150,000, then you need £7500 as a deposit and the Scottish Government – or a housing association – will add its stake to your deposit. By doing this, they reduce the amount you need to borrow through a mortgage, making your repayments more affordable.
You don’t have to pay any interest on the sum staked, so it’s a valuable option for qualifying applicants. But there are particular groups that the scheme aims to prioritise, which means not everyone is eligible.

LIFT is targeted towards:

  • People who currently rent from either a local authority or a housing association

  • Disabled people

  • Members of the armed forces (or widows, widowers and other partners of service personnel if they apply within two years of their partner being killed while in service)

Veterans who have left the armed forces within the past two years.
If you are approved under LIFT then it can be used to help you buy a home in three ways, either:

  1. .A new property that has been built by a Housing Association.
    This is called New Supply Shared Equity. You will normally be expected to finance 60-80% of the purchase price of the property, including your deposit. (In some circumstances you may be able to purchase as little as 51%.)
  2. .A new-build home from a panel of private developers, which is known as New Supply Shared Equity with Developers.
    Here, you would normally be expected to purchase a 60-80% stake in a property, in a pre-approved new-build development in Scotland. This sum includes your deposit and the Scottish Government will fund the remaining stake to the private developer.
  3. An existing property you’ve found on the open market.

Called the Open Market Shared Equity scheme, you can ask for a stake up to a maximum of 40% of the home’s value. (The maximum eligible price ranges depending on where the home is located.)

In future, if you can afford to purchase more of the property, you can take a larger portion of your home’s current market value in increments of 10% of the value of your home at that point in time. (As well as the 10% value, you will also need to pay for a valuation and the legal fees.)

If your lender is willing, rather than saving up a lump sum, you can fund the 10% increment by adding it to your mortgage. You simply pay the increased monthly repayment on your new total sum borrowed. This is known as ‘staircasing’.

You can also sell your property at any time. You must inform the Scottish Government or Housing Association that you want to move first, (unless you have already staircased your way to having a 100% share in the home’s current value). The stakeholder may then decide to buy your share back from you, which means the house will be offered to another shared equity applicant.

If they decide not to buy back your outstanding share, then you will be able to sell your home on the open market and must repay the outstanding stake from the sale proceeds.

The Scottish Government can insist they retain a stake in your home, called a ‘golden share’, to make sure your home will remain available as social housing if you sell. This stipulation must be made known to you before you buy the property – it can’t be enforced later.

You can only use LIFT if you are a first time buyer, and you must be planning to live in the property you buy. Buy-to-let or second homes are not eligible.

The maximum eligible price varies according to area.

If you wish to be considered, and meet the priority criteria, then you will also need to have a good credit rating. Your existing income and level of borrowing will be assessed when a lender calculates how large a mortgage they will offer, and what interest you will be charged.

For more information and to discuss if LIFT can help you afford a new home, contact us today.

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