Anyone help on Lift Scotland scheme

MrsDB

Hi

I am going round in circles here - i am looking to sell my property which I bought in 2007 with the Lift Scheme through the Scottish government. Obviously the housing market then crashed not long after I moved in.

I am getting valuations done on my flat by three estate agents at the moment. I am not sure where I stand because I know it will sell this less than what it was bought for.

My question is what happens with the sale - do they pay off my mortgage then LIFT take the remainder or do I receive say for example receive 60% of the sale price to pay towards my mortgage, they take the 40% and I will then be in a negative with the bank for the remainder of the mortgage left?

I have tried everyday to speak to someone at Lift to be told they will call me back which they never have and no contact details on the Scottish LIFT website on this situation.

Any advice would be helpful, I just dont want to put on the market and cant afford at the end of the process to be in a large negative to the bank that I cant pay.

beecher2

Don't you have the original documentation? I thought it would be all set out there.

http://www.scotland.gov.uk/Publications/2014/04/7891/7 gives details of the system as it is now, but I don't know if it has changed

An example of when the value of your property decreases

Initial property value £100,000

Your stake - 80 per cent £80,000

Scottish Government's stake - 20 per cent £20,000

Sale price £90,000

You receive 80 per cent £72,000

Scottish Government receives 20 per cent £18,000


In this example, the property value has fallen by £10,000. You have an 80 per cent stake and make a loss of £8,000 (80 per cent of £10,000).

You would need to make arrangements to pay off the % negative equity in this scenario - maybe worth speaking to your solicitor?

kingstreet

Mortgage is repaid from the proceeds, then the Scottish Government gets what's left to repay the second charge, if anything.

It may be an idea to talk to them about selling at a loss, just to ensure they are aware of it as they will have to agree to the lifting of the charge, otherwise you won't be able to sell.

That example does not make clear that the mortgage lender's first charge is repaid in full first.

beecher2

Are you sure kingstreet? This document
http://www.scotland.gov.uk/Resource/Doc/235963/0064685.pdf
is from 2008 and has the same example as I posted above

kingstreet

The guide is intended to be simple, but this;-

The shared equity arrangements will include the granting of a mortgage (or ‘standard security’ as it is known in Scotland) to secure the rights of the Scottish Government.

on page eleven confirms the charge over the property. Now I'm no expert on this scheme, but it would be the only one in existence if it was a first charge and the mortgage lender accepted a second.

In which case, the proceeds in the hands of the solicitor would first be used to settle the first charge, which I believe is the mortgage, not the equity loan which is a second charge.

I'd suggest the OP gets advice on this and perhaps they could come back and tell us.

kingstreet

Now I'm researching this more, I don't think it is a straightforward shared equity second charge.

Unlike HTB/FirstBuy/Developer Shared Equity where the purchaser buys 100% of the property and a second charge secures the Government's (eg) 20% loan, this appears to suggest you actually only buy 80% of the property, so it's like a hybrid shared equity/shared ownership scheme, with 20% retained by a third party like a RSL/HA.

The New Supply Shared Equity Scheme

The New Supply Shared Equity scheme enables you to own a property outright, but only pay up to 80% of its value. The remainder is paid for by a housing association or housing co-operative via a loans provided to them by the Scottish government.

http://www.moneysupermarket.com/mortgages/hubs/first-time-buyers/buying-in-scotland-wales-northern-ireland/

I'm very puzzled and the OP should definitely investigate further as I may have been talking rubbish.

MrsDB

Thanks I have a solicitor calling me tomorrow to go over this with me. The original paperwork doesn't have this in it for examples like this.
I have tried and tried to speak to Homestake about this but they said only one woman can deal with it and she never calls me back or returns my emails.

I did speak to someone for information and she said they usually pay off the mortgage first but I need this confirmed before I waste anyone's time or are left with a large bill at the end of the sale I can't afford to pay.

I'll update you once the solicitor has confirmed the situation