Shared Equity House Purchase

Shared Equity schemes – The First Home Fund relaunched on 1st April and 7 days later all the funding from the Scottish Government had been allocated and applications closed.

If you were hoping to use this scheme to help with the purchase of your first home then have you considered the other shared equity schemes available?

Mortgage Advice

Help to Buy

The Help to Buy Smaller Developers New Build scheme Affordable New home scheme is for new build property being sold by registered home builders. This is available for both home movers and first time buyers but there is a maximum purchase price which is £200,000 with the maximum assistance available 15% of the purchase price.

A list of the smaller developers under this scheme is available at Help to Buy (Scotland) Smaller Developers New Build Scheme.

New Supply Shared Equity (Home Builder)

This is open to First Time Buyers but you can also be considered where you may have previously owned a home and have experienced a significant change to personal circumstances such as a martial breakdown. The scheme can also apply a maximum household income which if exceeded would mean that you would not qualify.

This scheme is available via some housing associations and house builders. This can be as part of the planning permission to build a set number of affordable homes.

The assistance available will range from 20% to 40% of the purchase price of the property. And you are required to contribute typically 5% deposit from your own funds. 

You will own 100% of your new home but the Scottish Government will take a security over the property for the percentage of the assistance provided. A version of this scheme is also offered from some Housing Associations / builders with the shared equity loan being split between the Scottish Government and Housing Association / builder.

More information is available at https://www.mygov.scot/new-supply-shared-equity-scheme/overview/

LIFT Open Market Shared Equity Scheme (OMSE)

With this scheme there are restrictions on the maximum purchase price and size of property that can be purchased depending on where the property is located.

If accepted, you are then able to purchase a property that is being sold on the open market and are given a 3 month time period to secure a property which needs to be approved by the scheme prior to making a offer on it.

You must contribute towards the purchase with the maximum mortgage you can obtain plus any deposit you have available. You can get between 10% and 40% assistance from the Scottish Government in the form of an equity loan. If with the mortgage available and your own deposit you can raise more than 90% of the purchase price you will not be eligible for the scheme.

https://mortgagebrokeraberdeen.com/lift-shared-equity

Financial Advice

Whether a first time buyer or a looking to move home getting the correct financial advice is the key to making your plans a reality. To discuss the different shared  equity schemes and get the mortgage advice you need get in touch with David on 01224 679330 or email david@portfs.co.uk.

Your home may be repossessed if you do not keep up repayments on your mortgage.

 

Shared Equity Home Purchase Schemes

Mortgage Advice

If you are looking to purchase a new home then there are a number of “shared equity” schemes available from the Scottish Government to assist and I have summarised below details of these shared equity schemes. 

First Home Fund

The Scottish Governments First Home Fund has proved very popular since its launch and has now run out of funding for the current financial year. The scheme will reopen in the New Year for applications from First Time Buyers for purchases completing between April 2021 to March 2022. (for more information on the First Home Fund head over to https://mortgagebrokeraberdeen.com/first-home-fund)

The First Home Fund is the most flexible of schemes available to assist First Time Buyers but it is not the only “Shared Equity Scheme” available.

LIFT Open Market Shared Equity Scheme (OMSE)

With this scheme there are restrictions on the maximum purchase price and size of property that can be purchased. This is based on the area in which the property is being purchased and the size of property allowed for your household.

If accepted, you are then able to purchase a property that is being sold on the open market. You must contribute towards the purchase with the maximum mortgage you can obtain plus any deposit you have available. You can get between 10% and 40% assistance from the Scottish Government in the form of an equity loan. If with the mortgage available and your own deposit you can raise more than 90% of the purchase price you will not be eligible for the scheme.

https://mortgagebrokeraberdeen.com/lift-shared-equity

New Supply Shared Equity (New Builder)

This again open to First Time Buyers but can also be considered where you may have previously owned a home and have experienced a significant change to personal circumstances such as a martial breakdown. The scheme can also apply a maximum household income which if exceed would mean that you would not qualify.

The assistance available will range from 20% to 40% of the purchase price of the property. You will own 100% of your new home but the Scottish Government will take a security over the property for the percentage of the assistance provided.

More information is available at https://www.mygov.scot/new-supply-shared-equity-scheme/overview/

Help to Buy

The Help to Buy Affordable New home scheme is for new build property being sold by registered home builders. This is available for both home movers and first time buyers but there is a maximum purchase price which is £200,000.

The maximum assistance available is 15% of the purchase price.

How the scheme works – https://mortgagebrokeraberdeen.com/category/help-to-buy

Mortgage Advice

To find out more about the different schemes and whether you would qualify and if they would be of benefit to you get in touch with David who will be able to review your mortgage options.

Call David on 01224 784030

Email david@portfs.co.uk

Your home may be repossessed if you do not keep up repayments on your mortgage.

LIFT – Open Market Shared Equity

The Low-cost Initiative for First Time Buyers – LIFT Open Market Shared Equity Scheme might be for you.

Unlike the Help to Buy scheme which is only for new build homes from house builders the Open Market Shared Equity (OMSE) scheme is for homes that are for sale on the Open Market. So if you want to buy your first home but can’t afford the total cost this might be the right scheme for you.

How it Works

The Scottish Government will give assistance to qualifying first time buyer by taking an equity share in your new home.

You will own the largest share usually between 60% and 90% of the purchase price with the Scottish Government holding the remaining share under a shared equity agreement. The mortgage lenders will typically require you to have a minimum of a 5% deposit based on the full purchase price/market value.

If you were to purchase a 75% share of your new home, the Scottish Government will provide assistance for 25% of the purchase price.

You will own 100% of your home and have the title deeds in your name but the Scottish Government will have a “standard security” on the home to protect their share. It also means that when you sell they get a their share of the sale proceeds back.

How to qualify

You need to be able to show that you can’t afford to buy a home that meets your needs without help from the OMSE scheme. If it looks like you’d be able to buy a home without any help, your application won’t be eligible.

Maximum price thresholds

There are maximum price thresholds and criteria on what you can purchase. The price threshold varies depending on where you are purchasing and the size of property you are eligible for. You can typically purchase a property that is one apartment larger than you require an apartment is classed a room. So, a 3 apartment property is a 2 bed property.

In Aberdeen City a one bed property (2 apartment) has a maximum price of £110,000 and a 2 bed (3 apartment) £130,000. In South Aberdeenshire these figures increase to £125,000 for a 1 bed (2 apartment) and £170,000 for a 2 bed (3 apartment) property.

Example

If you can get for example a mortgage of £85,000 you could if you qualify for the scheme purchase a 1 bed property in Aberdeen city for £110,000 and 82% share, £90,500, made up of your £85,000 mortgage and a deposit of £5,500.

What to do next

Get in touch and we can discuss the scheme in detail and your eligibility. The next step is to apply to the scheme administrators and if approved you will be issued with a “passport letter” then once you have found your home a copy of the valuation has to be provided so that the property can be approved.

If it seems complicated, don’t worry, we are here to assist at every stage of the process and make it as easy as possible.

To get more information or arrange an appointment give David a call on 01224 784030 or email david@portfs.co.uk

Portlethen Financial Services

Mortgage Advice Aberdeen

David Butler, Portlethen Financial Services, Unit 14 The Green, Portlethen, AB12 4UN

Your property may be repossessed if you do not keep up repayments on your mortgage.