FTB.... Maybe

colinrobbie

Me and my partner have recently decided we have had enough of where we are, renting from the council and not in a very nice area.

We stay in a tenement flat with upstairs and downstairs neighbours both of whom are noisy and undesirable!

We also have a little boy who is now at the curious stage of wanting to explore the great outdoors and wish to move somewhere where he can get out, and won't have these neighbours.

Wanting to explore our options we spoke to a mortgage broker (whole of market) who suggested we'd be prime candidates for the LIFT scheme in Scotland being council tenants. I've read numerous things about shared equity on this and similar forums both good and bad.

We have access to a modest deposit (5% through my SAYE scheme) which is all that is required for the LIFT Scheme.

We could stay here and save a larger deposit but my question is, are we better to go with this scheme (which is available on the open market not just newbuilds and contractors) where our monthly repayments could realistically be less than our rent and build some equity. We could overpay at least in the short term as KFI's our broker went through has repayments less than current rent.

Bigger deposit or get paying off a mortgage now?

I know these things take time but we would like out of here ASAP.

ruggedtoast

How long is a piece of string unfortunately. Shared ownership schemes tend to benefit developers and housing associations more than individuals. Its basically a convoluted method of subsidising the lower end of the housing market to try and put a floor under prices, while generating huge amounts of baffling acronyms and untold piles of admin overseen by an army of committees and quangos.

Exactly what New Labour loved to do.

On the whole you pay more than the market rate for a percentage of a place that lands you with all the disadvantages of renting and having a mortgage combined.

When you want to sell you then have to find a buyer willing to take this on who is also an acceptable tenant for the HA.

Then again it could present you with the opportunity of moving to a much nicer place you may not be able to afford to live in otherwise. One would also presume (hopefully) that if you get into financial difficulties later the HA will be more understanding about arrears than the private sector.

If you go in with your eyes open and you have no other realistic alternative then you may as well. You will likely need much more than a 5% deposit to buy on the open market.

colinrobbie

The scheme is on the open market though. Essentially the LIFT scheme grant provides the deposit then when we sell the house they get the percentage of the sale. Option to buy larger share is available after 2 years. The way I saw it was we could stay here and save a deposit or we could move now and pay off some mortgage whilst still being able to save and buy the other share to own the house outright, essential saving the deposit after we move in.

beecher2

Have a look at the Evaluation of LIFT here

http://www.scotland.gov.uk/Publications/2011/01/18143303/1

to help you make your decision.

colinrobbie

I had seen that, and don't see a bad side to it in my circumstances. I believe many people see shared equity and think shared ownership which I don't believe is a good thing for us.

bride2be2012

You don't say where you are in Scotland or what size of property you are looking at, but where I am (north of Scotland), there's a 2 years waiting list to get a 2 bed LIFT property.

If I were you, I'd go for the LIFT property. But be aware, you may still end up with problem neighbours, as this can happen anywhere.

As to the benefits v. negatives with the LIFT scheme, I think you are right when you say a lot of people confuse it with shared ownership, which it isn't!

colinrobbie

I'm in Dundee, how can there be a waiting list on the open market? We'd be entitled to a 2/3 bed house as we have a child and you can get one more room than require and the respective price thresholds are 80k/100k.

Once approved for LIFT don't you have 12 weeks to find a property and get an offer accepted on it? Once this lapses you must apply again is what we were told.

bride2be2012

Sorry, didn't read that bit about the open market. I'm in Inverness and they've withdrawn the open market part of LIFT here due to such high demand, and so there's a two year waiting list for LIFT new builds

That's great you can find places straight away though, wish they'd do that up here!

colinrobbie

Hasn't it only just been rolled out nationwide? With priority to those in social housing and military personnel?

bride2be2012

Thanks, yes, I was just checking that just now! Unfortunately, we are not in social housing or the military, but still you can never tell until you apply!

colinrobbie

We could move almost as soon as application is complete, was just looking to gauge whether I'm better off to save a deposit or overpay on a mortgage which matches our current rent.