LTV & Shared Equity (LIFT Schemen Scotland)

maillme

Hi there,

I have placed a reservation fee on a new build, shared equity property in Scotland.

I am paying 75% and the LIFT Partner (Link) are paying 25% (Purchase Price is £105, 000).

A financial advisor advised me (via email convo.) that shared equity means there are more choices of mortgage with more favourable LTV deals - 95%.

He advised that as deals are only offering 95% LTV at best that i would need to find the 5% from my own funds - so i would need to find approx £5k - which i can not do!

I was of the understanding that the government shared equity scheme (LIFT) was to help first time buyers onto the housing market by paying deposit for you etc - if i still need to find £5k (although still a good deal) then it hasn't really helped me!

Has my FIA picked me up wrongly, or does it indeed look like although im only needing to borrow 75% of the house value (government paying remainder) - im still going to need to add 5% myself?

Please help - confused now and worried!
thanks.
Neil

poppy10_2

The banks realize that shared ownership is a scam, which is why they are protecting themselves by asking you to pit in a minimal deposit - 5% is virtually nothing. If you can't save up £5k then you can't afford to buy a £105,000 house.

maillme

hi poppy, thanks for your reply - and your assesment of m y affordability and situation. if only 5k were pocket change to us all! with regard to shared ownership - i stated shared equity which is different - do the mortgage lenders also see this as a scam? thanks, neil

maillme

anyone got some proper advice??

thanks,
Neil

hostman

maillme wrote: »

anyone got some proper advice??

thanks,
Neil

Yeah, don't fall for these "shared equity" or "shared ownership" scams.

In the long run, you will not be better off.

Reduce your outgoings and save.

Cannon_Fodder

See http://forums.moneysavingexpert.com/showthread.html?t=1907553 for a variety of trials and tribulations on the LIFT scheme.

Including the Halifax shock decision to withdraw "100%" mortgages, that caught a few people out just as they were progressing their application.

I think its fair to say that lenders want to encourage a contribution from buyers to protect themselves from possible future falls in prices.

As others may only be going for 60% equity, that 5% deposit equates to an 8.33% price fall being allowed for, though the Scottish Government will pick the tab up on the other portion. Not clear on LIFT documentation what effect that has on your taxes...

http://www.scotland.gov.uk/Resource/Doc/235963/0064685.pdf

There does appear to always have been a provision for "contributions", though its unclear if that includes the deposit to your lender...

I would suggest that the 25% paid by the Link Partner is the "deposit", in the traditional sense. Wanting 5% of 75% (although the linked post also shows confusion over whether thats correct or not, it might be 5% of the 100%), i.e. really 3.75%, is not much to ask from someone who wishes to accept the largesse of your country's taxpayers.

JEWISHPRINCESS

I have spent the last few weeks searching for mortgages in conjunction with the LIFT scheme. It hasn't been easy as some people at the banks tell you one thing, only to be informed by a colleague the other. To say I'm exasperated is an understantement!

As far as I am aware Nationwide, Lloyds TSB and RBS are still offering mortgages without a deposit - but this could change at any time.

FirstMortgage (brokers) seem to be very efficient in sourcing good deals in conjunction with the LIFT scheme.

Goodluck.

Muhasib

JEWISHPRINCESS wrote: »

I have spent the last few weeks searching for mortgages in conjunction with the LIFT scheme. It hasn't been easy as some people at the banks tell you one thing, only to be informed by a colleague the other. To say I'm exasperated is an understantement!

As far as I am aware Nationwide, Lloyds TSB and RBS are still offering mortgages without a deposit - but this could change at any time.

FirstMortgage (brokers) seem to be very efficient in sourcing good deals in conjunction with the LIFT scheme.

Goodluck.

I understood that Nationwide required a deposit, I spoke to them today and while they said they needed a branch appointment to discuss fully they did say they would need a contribution from the buyer; regarding Lloyds TSB, will they not follow the same mortgage policy for shared equity as HBOS as its all Lloyds Banking Group?

JEWISHPRINCESS

You would think that they would indeed follow the same policy as HBOS but they don't. My broker assures me that Nationwide DO NOT require a deposit in conjunction with the LIFT scheme. I have just checked with Nationwide and they have agreed with the broker.

The LIFT scheme in Scotland is very different from the shared equity schemes provided by house builders etc as it is Governent funded. There seems to be a great deal of confusion surrounding this going by some of the misguided posts I have seen on this thread.

iscrimger

Link Homes did provide me with a list of lenders who were known to support the scheme, some of them did require a 5-10% deposit on my share.

I have been caught out slightly. I got my Agreement in Principle in April/May with Halifax. They have just introduced this 5% deposit on you're share and I've got just weeks before my LIFT offer expires, so I have to find £4100 pretty much this week unless another lender can match the HBOS offer (LIFT used my Halifax agreement as the minimum contribution). I've so far reached £2k in 7 days, which is quite an achievement with my rental costs & council tax. I may have to tap into the bank of Mum & Dad for the remainder.

JEWISHPRINCESS

Goodluck with the Bank Of Mum and Dad.

I don't suppose you could put the list of lenders on this thread or PM me them.