FTB using a LISA in Scotland

Edinburghsaver

Hi all - looking for some advice.

I've been saving to buy my first home for what feels like forever. I started a HtB ISA which I transferred to a LISA last financial year to get the bonus - I have maxed my contributions this year and now have £15k sitting in the account.

My question is around what this can be used for in Scotland. Obviously, the bulk of this money will be used for the deposit to the bank - I'm looking at properties where the home report value is around £130k so I have 10% deposit available.

However, in the Scottish market you typically also need to put in an offer higher than the home report value and the bank will not lend this. My question is whether I can use money held in my LISA towards this 'offers over' fund. (If I can, I will wait until the new FY and put another £4k into the LISA account to get the bonus - if i can't, I'll leave it in my savings account and save the offers over fund separately.)

I don't yet have a conveyancing solicitor or I would ask them, so just wondering if anyone here has been through the process in Scotland.

googler

You may well have to offer over HR in Edinburgh, but this situation becomes less of an issue once you move out from the city.

Edinburghsaver

Unfortunately, due to work we do need to buy in central Edinburgh, where flats are frequently being sold for 10% over the home report value.

googler

There's many areas within a very short commute, with three rail corridors leading into the city .... savings of a few thousand on the property could potentially buy months or years' worth of rail travel.

Sibz

The LISA is to help you get on the housing ladder.

A lender will lend you up to X amount based on your credit rating and affordability score.
The max they will lend on a property is what they value it at. So unless you are offering more than your whole LISA amount above the valuation it shouldn't be an issue.

a LISA isn't a convenient high interest savings account - its for house purchase or pension.
Unless you've set your sights extremely high by house size or area you shouldn't have a problem.

Edinburghsaver

I'm not sure I have explained this very well, let me add some figures in.

I have seen a property which has a home report value for £130k. Similar flats on the street have sold for £140k. I can get a mortgage for 90% of the home report value (£117k) with a 10% deposit (£13k). However, I would also need to offer around £10k over the home report value to have a chance of getting the property. Can this £10k come from my LISA account?

Sibz

Edinburghsaver wrote: »

I'm not sure I have explained this very well, let me add some figures in.

I have seen a property which has a home report value for £130k. Similar flats on the street have sold for £140k. I can get a mortgage for 90% of the home report value (£117k) with a 10% deposit (£13k). However, I would also need to offer around £10k over the home report value to have a chance of getting the property. Can this £10k come from my LISA account?

I believe the minimum lending criteria for your lender would require a 10% deposit - That's just lending criteria (all lenders have that but it varies).
Your LISA pot is your 'deposit'.

It sounds like your max mortgage you'll get on this is £117k. You should be able to increase your deposit to achieve the £140k (or whatever the offer you want to make is) - if you have the money.

Clarify it with your broker - but your funds should be LISA plus up to £117k...

Edinburghsaver

I'm still not sure that this answers the question.
Has anyone been able to use money in their LISA to put in an offer over the home report value, or can LISA funds only be used as a mortgage deposit?

CarrieVS

Edinburghsaver wrote: »

I'm still not sure that this answers the question.
Has anyone been able to use money in their LISA to put in an offer over the home report value, or can LISA funds only be used as a mortgage deposit?

Unless I'm very much mistaken, the amount you pay out of your own funds, as opposed to what you borrow from the mortgage lender, is the mortgage deposit. Just because you might pay more than the house is officially worth doesn't mean it's not part of the deposit.

The only complication is in saying what percentage deposit you have (20% or 18% depending on how you look at it, or possibly 10%) but that doesn't affect anything of importance (everything of importance goes by the LTV).

emilysexton89

Hi,

I am also buying in Scotland just now, and came up against the same scenario with the property going for above the home report.

The figures were £155,000 mortgage, £185,000 property value, £205,050 purchase price.

The £30,000 "mortgage deposit" was made up of £9,000 help to buy ISA, bonus of £2,250, and the remaining £18,750 made up from savings. The additional £20,050 was also made up from savings.

So all in all I was putting down £50,050, so yes even in an above value transaction you can utilize the bonus.

The property I was going for was offers over £156,000 by the way...